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TBC Capital Published A Report On Monthly Macro Insights

13.06.23 14:00
TBC Capital published a report on Monthly Macro Insights. According to the document, April growth came in stronger than expected at 7.5%, being an argument to revise TBC Capital's latest outlook upwards to probably around 7.0%.

While May headline CPI inflation print was in line with TBc Capital's estimates, the MoM service one was elevated, though most likely driven by the one-off.

Daily indicators of deposits by currencies point to a shift in sentiments now with stronger growth on the FC side;

When looking at balances of loans and deposits compared to FX flows, it is clear that even a small movement is comparable with what one would call an external shock, say a strong drop in tourism inflows, etc.

"We would call this shift in sentiments “a change from appreciation expectations to probably a broadly neutral stance”, rather than strong depreciation expectations as such;

Unlike previous sizable interventions, this time, the information on the selling side was available for the market participants the same day, likely with the intention to impact exchange rate expectations;

Recent TRY weakness is a downside, however, in this regard, we recall our earlier assessments indicating that a) a weaker lira has some pass-through on the GEL primarily when other regional currencies also drop against the greenback and b) a weaker TRY/GEL has an impact on Georgian bilateral trade balance, but it seems to be affecting only a bilateral rather than overall one, as in most cases cheaper Turkish imports, certainly adjusted after inflation in Turkey, primarily compete with other imports and not necessarily with domestic producers;

On the GEL, from three pillars perspective, we remain bullish on net inflows, however, bearish on REER and inflation pillars;

We also stick to our view that once everyone expects the GEL seasonality, one should no longer anticipate the pattern to hold", - the document reads.