TBC Research publishes weekly bulletin. According to the report, in November 2019, remittance inflows to Georgia went up by 13.3% YoY and reached USD 151.0mln, while net remittances increased by 13.7% YoY to 129.2 mln USD. Inflows from the EU remained the key driver of growth with 16.3% YoY increase.
At the same time, remittances from the CIS countries also accelerated on the back of stronger inflows from the Central Asian countries as well as Ukraine and Armenia. Inflows from Russia also increased slightly (+0.3% YoY) as opposed to 4.5% decline in the previous month.
On December 11, 2019, the NBG Monetary Policy Committee raised the monetary policy rate (MPR) by 0.5pp to 9.0%. According to the MPC statement, the GEL nominal effective exchange rate, being the main driver of higher inflation, remains undervalued despite recent strengthening. To pin down the inflation expectations and alleviate exchange rate pressures on inflation further increase of policy rate was deemed necessary.
Overall, policy rate went up by 2.5 pp to 9.0% since August 2019. As stated by the MPC, inflation is expected to start declining from March 2020 and will align closer to the target by the end of 2020. Georgia’s merchandise export grew by 25.2% YoY and reached USD 345.9mln in November 2019.
Imports also increased to USD 782.7mln (+4.2% YoY), and the trade deficit improved by 8.0% compared to November 2018. According to the initial estimates, FDI was up by 13.7% YoY in the Q3 of 2019 reaching USD 417.3mln. Increase was primarily driven by doubled reinvestment of earnings, while equity inflows fell by 55.2% YoY.
FDI related debt went up by 48.5% YoY, however, its contribution to overall FDI growth have been limited. In terms of regions, FDI inflows were fully driven by the EU (+94.9% YoY) while those declined from the CIS (-58.2% YoY) and other countries (-14.0% YoY). As for the sectors, financial, construction and healthcare sectors contributed most to the growth, while FDIs fell most in transport, real estate and manufacturing.
