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Plans to Reopen Tbilisi and Resume Tourism

8 May, 2020

Reopening Tbilisi
The government decided to lift lockdown in the capital Tbilisi from May 11 as part of a gradual easing of coronavirus restrictions. Tbilisi was locked down on April 15, few days ahead of Easter holiday, with bans on vehicles entering or leaving. The production activities, as well as some retail and wholesale shops with entrances from the street will also be resumed from May 11 across country. Georgia still has a state of emergency through May 22, which includes nationwide curfew. The number of new cases of pandemic began to shrink this week and reduced to 5 in the last 24 hours while testing increased from c.500 to 1,800 in last 2 weeks. As epidemiological situation is better than expected a few weeks ago, government accelerates economic reopening timeline presented on 24 April.

Resuming tourism
Georgia sets goal to open its doors to foreign tourists after months of lockdown due to the pandemic and to welcome international travelers with a new image - Georgia - Safe Destination! “Georgia looks forward to welcoming international tourists starting July 1. Health and safety of our citizens and visitors will remain our top priority” Georgian Prime Minister Gakharia tweeted on May 7. Earlier, the country plans to resume domestic tourism from June 15. 

Government’s latest Tourism Recovery & Anti-Crisis Plan presented on May 7, includes recovery as well as safety measures:

Tax exemptions and other support (budget of GEL 200mn):  

  • Tourism sector will be fully exempted from property taxes in 2020 (GEL 45mn savings)
  • Personal income tax for companies operating in the tourism sector will be postponed until end-2020 (GEL 90mn)
  • Bank loan subsidies for hotels (GEL 60mn for 3,000 hotels)
  • Support to travel agencies and guides (GEL 5mn)

Georgia to be promoted as a safe destination:

  • Introduction of international safety standards at border crossings and airports (IATA/ ICAO/EC), at guest accommodation/guides/F&B (WHO & UNWTO) and at transportation companies 
  • Support to the private sector in the introduction of standards and conducting trainings 
  • Negotiations with air carriers on the resumption of operation
  • Creation of safe corridors between countries
  • Integration of Georgia in the cooperation with EU Members States
  • International marketing campaign Georgia - Safe Destination!

Support to other industries
Prime Minister announced that tourism is the first in terms of post-crisis opening and support. This will be followed by support schemes for agriculture, construction and development, and anti-crisis actions in education.


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GEORGIA'S ENERGY SECTOR - ELECTRICITY MARKET WATCH | 1Q20

7 May, 2020

Ministry of Economy expects decrease in electricity consumption caused by Covid-19 to continue until Sep-20.  Electricity consumption was down by 7.8% y/y in Mar-20 due to partial lockdown caused by Covid-19 pandemic. Pandemic impact on electricity consumption will be sharper in April 2020, when full lockdown was in place. However, based on the updated annual forecast of the Ministry of Economy and Sustainable Development (adopted on April 24, 2020), the annual decrease in consumption in April is expected at 5.9%, less than actual growth figure for March. The same document forecasts negative growth of electricity consumption to continue until Sep-20, resulting in 0.8% drop in annual electricity consumption in 2020 (to 12.7TWh). 

In order to mitigate the negative impact of coronavirus, the government will cover population’s utility bill for 3 months. This support will affect those subscribers who consume less than 200 kWh of electricity and 200 m3 of natural gas in a month. This consumption is approximately equal to the monthly payment of GEL 37 in the case of electricity and the consumption of GEL 100 for natural gas. Citizens were allowed to leave the support scheme voluntarily and 3,534 subscribers refused this support in March.

Shuakhevi HPP resumed operations in February 2020. The 178-megawatt station was first launched in 2017, but had to undergo repairs due to technical problems with the tunnel. In March 2020, its output was 58.9 GWh, which is 5.4% of the total supply this month and 8.3% of hydropower.

Policymakers are meeting their deadlines set by newly adopted energy law for market reforms.  Government of Georgia has adopted concept design of electricity market; Georgian Energy and Water Regulatory Commission adopted licensing rules for Transmission System Operators and made changes into some legislative acts, including grid code. According to concept design of electricity market: Power trading on day-ahead, intraday, bilateral and balancing markets should start by Jul-21; Public service provider at wholesale level (probably ESCO) will be in charge of price stability on the market and supply of electricity to Abkhazian region.


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Real estate market watch - May 2020

4 May, 2020

The demand for housing accelerated in Jan-Feb 2020 helped by last year’s low base and record low FX mortgage rates, before plummeting again in March due to Covid-19. Notably, apartment sales continued solid growth in 1st half of March 2020, before state emergency and lockdown was announced. In March 2020, real estate fundamentals were sharply affected by Covid-19 outbreak, putting real estate sales under pressure. Increased risks, combined with inflationary pressures and deteriorated consumer sentiments, bring back memories from 2008-2009 crises, when real estate prices and construction activity dropped sharply and it took 3 years to accelerate again.

Please see the full note here, which brings together real estate sale and price analytics for 1Q20, Covid-19 impacts and other statistical information available in the real estate market.

 


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Regional Fixed Income Market Watch April 2020

24 Apr, 2020

 
Highlights
  • COVID-19 pandemic has pushed the world economy into a recession and IMF forecasts global growth in 2020 to fall to -3%. IMF forecasts negative growth in 8 out of the 9 regional economies as pandemic and oil price drop deepened economic problems in 2020 (Georgia -4%, Armenia -1.5%, Azerbaijan -2.2%, Belarus -6%, Kazakhstan -2.5%, Ukraine -7.7%, Russia -5.5%, Turkey -5.0%, Uzbekistan +1.8%).
  • Central banks of advanced economies cut policy rates to historic lows. To date, central banks have announced plans to expand their provision of liquidity by at least US$ 6tn. By these measures regulators help to contain upward pressures on the cost of credit to ensure households and firms continue to have access to credit at an affordable price.
  • As of April 2020, monetary policy rate is at 5.25% in Armenia (-25bps), at 6.0% in Russia (unchanged from previous meeting), at 7.25% in Azerbaijan (unchanged), at 8.75% in Belarus (-25bps), at 9.0% in Georgia (unchanged), at 9.5% in Kazakhstan (-250bps), at 8.75% in Turkey (-100bps) and at 10.0% in Ukraine (-100bps).
  • Global investors sold more than US$ 100bn of EM assets since the start of the virus outbreak, resulting in fall in EM asset prices. Foreign investors sold more than US$ 72bn in EM equities and US$ 25bn in debt according to the Institute of International Finance.
  • Foreign exchange rates suffered in most emerging markets. Year to date GEL depreciated by 11%, RUB lost 23%, BYN lost 18%, TRY and UAH depreciated by 17% and KZT by 13% against USD.
  • Amid massive capital outflows EM bond yields grew as prices decreased. UKRAINE 21 (9.9% YTM; 97.3 price) was the worst performer among the selected sovereign Eurobonds, rising 594bps in yield YTD. GEORGIA 21 (5.8% YTM; 101.0 price) rose 335bps in yield. BELARUS 23 (7.7% YTM; 98.0 price) was up 315bps, TURKEY 21 (5.5% YTM; 100.1 price) increased 246bps, ARMENIA 25 (5.7% YTM; 106.0 price) widened by 228bps, AZERB 24 (4.4% YTM; 101.2 price) increased 150bps, UZBEK 24 (4.5% YTM; 101.0 price) was up 136bps in yield. KAZAKH 24 (2.6% YTM; 105.4 price) increased only 38bps, while RUSSIA 23 (2.2% YTM; 108.8 price) performed more strongly than other regional bonds, with yield decreasing 11bps YTD.
  • Among Georgian corporate placements, SILKNET 24 (14.5% YTM; 89.5 price) was the worst performer, with its yield jumping by 684bps YTD, followed by GOGC 21 (10.3% YTM; 96.7 price) which widened by 717bps and GRAIL 22 (7.9% YTM; 99.7 price) which was up by 431bps. GCAP and Georgian banks performed relatively better, with GEOCAP 24 (8.5% YTM; 92.2 price) up 199bps in yield, TBC 24 (7.7% YTM; 93.0 price) up by 288bps and BOG 23 (5.7% YTM; 100.9 price) up 140bps in yield.
Please see the full report for detailed coverage of the fixed income markets of Georgia, Armenia, Azerbaijan, Belarus, Kazakhstan, Ukraine, Russia, Turkey, Uzbekistan.

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