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G&T Team
ResearchResearch Reports Weekly Market Watch

Weekly Market Watch

Real GDP growth was 7.5% in 2Q23
Georgia’s economy grew by 7.5% y/y in 2Q23 according to Geostat, revised upwards from the preliminary estimate of 7.4%. In terms of economic sectors, high contributions to the growth in 2Q23 came from trade (+14.6% y/y), construction (+22.7% y/y), education (+19.6% y/y), ICT (+20.2% y/y) and public administration (+11.1% y/y). Meanwhile, agriculture (-7.1% y/y), manufacturing (-2.8% y/y) and electricity supply (-7.0% y/y) sectors contracted in 2Q23.

Considering rapid estimate of real GDP growth of 5.5% in Jul-23, cumulatively Georgia’s economy increased by 7.2% y/y in 7M23. For the full 2023 year, we expect growth at 6.8%; Additionally, the ongoing parliamentary discussion on revision of 2023 budget, which foresees an increase in both expenditures and revenues driven by stronger macroeconomic indicators (with deficit and debt ratios to GDP at 3.0% and 38.4%, respectively), further supports our growth projection.

Goods exports up 4.8% y/y in Aug-23 
In Aug-23, goods exports increased by 4.8% y/y to US$ 495.8mn, after a 0.6% y/y decline in previous month. Goods imports were up by 0.9% to US$ 1.3bn in August, after growing by 2.8% y/y in July. Consequently, the trade deficit decreased by 1.5% y/y to US$ 778.3mn, after a 5.7% y/y growth in July. 
The top 5 exported commodities were cars (+58.3% y/y), copper (-50.5% y/y), wine (-24.7% y/y), spirits (+12.7% y/y) and electricity (+16.7% y/y), in Aug-23. A 11.7% of exports were directed to the EU (-30.3% y/y), 70.7% to the CIS (+21.1% y/y) and 17.6% to other countries (-13.3% y/y).
The top 5 imports were cars (+30.9% y/y), petroleum (-30.1% y/y), pharmaceuticals (+35.5% y/y), phones (+14.6% y/y) and trucks (+84.0% y/y) in Aug-23.
Overall, in 8M23, trade deficit increased by 20.2% y/y to US$ 5.8bn, as exports increased by 14.4% y/y to US$ 4.1bn, while imports were up by 17.8% y/y to US$ 9.9bn.

Producer price index fell by 3.3% y/y in Aug-23
Annual PPI for industrial goods fell by 3.3% in Aug-23, after reducing by 2.8% in previous month, according to Geostat. This decline was mainly driven by price reduction in manufacturing sector (-3.6% y/y).

NBG sold US$ 57.2mn 
On 20-21 September 2023, NBG intervened in the FX market and sold US$ 57.2mn to curb sentiment-related GEL depreciation pressure. The GEL swiftly gained the ground and is now trading at 1$/2.67. With strong fundamentals (FX inflows, strong growth, and healthy fiscal parameters) and high FX liquidity in the market, we expect GEL to stabilize at current levels through 2023. Notably, the NBG is a net buyer of US$ 1.4bn year-to-date by our estimates.