TBC Capital publishes Weekly Update From The Chief Economist. According to the report, TBC Capital expresses solidarity with the people of Ukraine in their current struggle, especially now with more civilian causalities. In fact, on the back of the positive expectations from the ongoing negotiations, last week was noticeable with a strong improvement of the market sentiments.
"Namely, in our view, the three most important indicators – the ruble, oil and gold prices, with some worsening by the end of the week, but still have shown the dynamics one would expect in the rapid resolution scenario. Furthermore, the sovereign risk premia as well as credit default swap spreads in the region have declined markedly.
On the domestic side, we also have observed relatively positive developments. In particular, the latest data on the remittance inflows has demonstrated a resilience. Certainly, it is too early to judge, however, we do not rule out positive growth for the full year 2022 in the USD terms. Furthermore, while tourism recovery has slowed, as expected, the higher spending by visitors mainly from Russia and Belarus, using locally acquired cards looks to be more than compensating for a slowdown in non-residents’ expenditures via foreign cards. Though there is some declining tendency as well as estimates are number of assumptions. Nevertheless, we increase our earlier annualized assessment of inflows from this source from 100 USD or more, to probably around 200 million USD though the impact still to be quantified for March.
On the key macro projections, uncertainties remain high, however, we now can say with relatively more assurance that the outlook is close to the rapid, rather than delayed resolution scenario. Furthermore, unlike a week ago, we are more bullish on the GEL. As for the other, pre war period data release by Geostat last week, the February trade in goods and last year 4th quarter wages once again indicate to a very strong pre-crises momentum in the economic activity", - the report reads.
