The Current Account (CA) deficit of Georgia reduced sharply, down by 67.7% y/y to 3.2% of GDP in 1Q23, from 13.3% in 1Q22, according to the National Bank of Georgia (NBG), reads the latest Weekly Market Watch of Galt & Taggart.
The authors of the report explain this improvement with "the strong growth in the service balance (reflecting tourism revenue growth of 102.0% y/y to US$ 795.4mn), followed by transfers balance (+36.1% y/y). The merchandize trade deficit, traditionally the major contributor to deficit creation, increased by 25.2% y/y to US$ 1.3bn, as exports increased by 24.2% y/y and imports were up 24.6% y/y. Notably, the positive balance in services and transfers was 1.1x higher than the trade deficit in 1Q23. In addition, the net FDI (6.1% of GDP) was 1.9x higher than CA deficit in 1Q23."
Considering 1Q and ongoing data of FX inflows, Galt & Taggart projects CA deficit at 3.8% of GDP in 2023, improvement from its previous forecast of 5.4%.
