Weekly Market Watch
Exports at record high US$ 524.6mn in May 2022
In May-22, exports surged by 54.3% y/y hitting record high monthly figure US$ 524.6mn, after a 10.1% y/y growth in previous month. Imports also increased strongly by 45.4% y/y to all-time high US$ 1,119mn in May, after growing 26.5% y/y in previous month. As a result, the trade deficit increased by 38.3% y/y to US$ 594.8mn.
The top 5 exported commodities were copper (+62.6% y/y), ferro-alloys (+175.0% y/y), cars (+46.8% y/y), electricity (+418.1% y/y) and fertilizers (+158.7% y/y), in May-22. A 14.7% of exports were directed to the EU (+89.1% y/y), 38.4% to the CIS (+26.7% y/y) and 47.0% to other countries (+75.3% y/y).
The top 5 imports were petroleum (+111.7% y/y), copper (+143.4% y/y), cars (+23.2% y/y), pharmaceuticals (+5.5% y/y) and automatic data processing (+168.7% y/y) in May-22.
Overall, in 5M22, trade deficit was up 37.1% y/y to US$ 2.7bn, as exports increased by 37.5% y/y to US$ 2.1bn, while imports were up by 37.3% y/y to US$ 4.8bn.
Producer price index retreated to 14.2% y/y in May 2022
Annual PPI for industrial goods retreated to 14.2% in May-22, after a 15.4% growth in previous month, according to Geostat. Price changes in manufacturing (+19.6% y/y) and electricity, gas, steam and air conditioning (-7.5% y/y) contributed the most to the overall index change in May.
NBG keeps key rate unchanged at 11.0%
The NBG kept its key rate unchanged at 11.0% on 22 June 2022 meeting. Elevated inflation and inflationary risks remain a global challenge, and global surge in food prices in recent months has transmitted to Georgia’s consumer prices as well, the regulator commented. The NBG also noted that the rise of long-term visitors from Russia, Belarus, and Ukraine increased apartment rents dramatically, adding 0.6ppts and 1.1ppts to headline and core inflation, respectively. Despite high uncertainty, the NBG expects that prices on international markets will not rise much and expects inflation to have a declining path as external factors are phased-out and monetary policy remains tight. The regulator also emphasized that lending remains strong driven by consumer and foreign currency loans, but expects some slowdown given introduced macroprudential measures and ongoing tightening from US Fed and other central banks. If this high growth of loans continues, the NBG will use additional measures at its disposal if necessary. The NBG also reiterated that monetary policy would keep a tightening bias until the risks of rising inflation expectations are sufficiently mitigated, and if inflation expectations continue to rise and/or demand-side pressures on prices exacerbate, further tightening of monetary policy may become necessary. The next committee meeting is scheduled for 3 August 2022.