Galt&Taggart published Weekly Market Watch. According to the report, Stronger tourism in Jan-22, revenues recovered to 80% of 2019. Recovery in tourism strengthened further in Jan-22 despite spread of the Omicron. Tourist arrivals (overnight stays) recovered to 53.5% of Jan-19 level, up from 45% recovery in 4Q21. Meanwhile, same-day arrivals, accounting for c.30% of total international arrivals pre-Covid, remained weak, accounting for 10.3% of Jan-19 level. That said, 177.1 thousand international visitors (up 424.4% y/y, tourists and same-day arrivals combined) traveled to Georgia in Jan-22, with most visitors from Turkey (17.9% of total), followed by Russia (16.0% of total), and Armenia (11.1% of total). Notably, arrivals from Ukraine, Israel, Kazakhstan, Saudi Arabia and Uzbekistan surpassed 2019 levels. Most visitors traveled to Georgia via air (50.3% of total), followed by land (49.0% of total). Galt&Taggart estimates Jan-22 tourism revenues at 80% of 2019 level in line with our forecast for the full 2022 year (we expect 80-85% recovery in tourism revenues in 2022 vs2019).
Real GDP growth was 9.6% y/y in Dec-21
Georgia’s economy grew by 9.6% y/y in Dec-21, which is also up by 0.9% compared to Dec-19 level. For the full year 2021, growth is estimated at 10.6% y/y (-4.1% in 1Q, 28.9% in 2Q, 9.1% in 3Q and 9.5% in 4Q), surpassing 2019 level by 3.1%. Like in previous months, all sectors posted
solid growth except for construction. We forecast growth at 5.0% in 2022, supported by continued recovery in tourism.
Inflation was 13.9% y/y and 1.1% m/m in Jan-22
Annual CPI inflation came in at 13.9% in Jan-22, unchanged from previous month, according to Geostat. Last year’s utility subsidy and therefore low base effect is one of the factors of high inflation, which will also last in February. Meanwhile, core inflation (non-food, non-energy) reduced for the fifth consecutive month to 5.6% (-0.3ppts m/m) in January. By categories, annual inflation was mainly driven by price changes in food and non-alcoholic beverages (+16.2% y/y, +5.27ppts), housing, water, electricity, gas and other fuels (+44.8% y/y due to Dec-20 low base, +3.69ppts), transport (+16.2% y/y, +2.08ppts), and restaurants and hotels (+16.0% y/y, +0.86ppts) categories. On a monthly basis, there was a 1.1% inflation in Jan-22, reflecting price increase in food and non-alcoholic beverages (+2.5% y/y, +0.84ppts) category. Galt&Taggart expects annual average inflation at 4.9% in 2022.
NBG kept its key rate unchanged at 10.5%
The NBG kept its key rate unchanged at 10.5% on 2 February 2022 after raising it by 50bps in Dec-21. The NBG commented that since 1H21, high inflation has been mainly driven by global increases in food, oil and shipping prices. According to NBG forecast, inflation expected to decline from spring 2022, supported by tighter monetary policy and fiscal consolidation along with the fade-out of one-off exogenous factors. The central bank said it will keep its monetary policy tight until the risks (supply side shocks, geopolitical tensions and faster-than-expected tightening of global financial conditions) of rising inflation expectations are sufficiently alleviated. The next committee meeting is scheduled for 30 March 2022.
Ministry of Finance T-Bills:
2-year GEL 70.0mn (US$ 22.9mn) Benchmark bonds were sold at the auction held at NBG on February 1, 2022. Total demand was c.1.9x higher and the weighted average yield was fixed at 9.788%, down by 0.140ppts from previous auction held in January, 2022. 6-month GEL 20.0mn (US$ 6.6mn) T-Bills were sold at the auction held at NBG on February 1, 2022. Total demand was 2.0x higher and the weighted average yield was fixed at 10.163%, down by 0.030ppts from previous auction held in January, 2022. The nearest treasury security auction is scheduled for February 8, 2022, where GEL 20.0mn nominal value 1-year T-Bills will be sold.
Equities
Bank of Georgia Group (BGEO LN) shares closed at GBP 14.50/share (-0.55% w/w and -11.91% m/m). More than 220k shares traded in the range of GBP 14.18 - 15.08/share. The average daily traded volume was 56k in the last 4 weeks. The volume of BGEO shares traded was at 0.45% of its capitalization.
TBC Bank Group (TBCG LN) closed the week at GBP 14.46/share (+2.55% w/w and -12.68% m/m). More than 193k shares changed hands in the range of GBP 14.04 - 15.12/share. Average daily traded volume was 32k in the last 4 weeks. The volume of TBCG shares traded was at 0.35% of its capitalization.
Georgia Capital (CGEO LN) shares closed at GBP 6.85/share (+4.74% w/w and -5.52% m/m). More than 484k shares traded in the range of GBP 6.40 - 6.91/share. The average daily traded volume was 135k in the last 4 weeks. The volume of CGEO shares traded was at 1.02% of its capitalization.
