Georgian economy declined by 7.7% in November 2020
By Natalia Kochiashvili
Wednesday, January 6
The National Statistics Office (Geostat) released the preliminary estimates according to which in November 2020, compared to the same period of the previous year, the decrease in the real gross domestic product (GDP) was 7.7 %, while the average for the first 11 months of 2020 is -5.9 %.
According to Geostat, there was a downward trend, especially the decrease in the turnover of VAT-paying enterprises. In November of this year, a decrease was observed in the following activities: construction, transport (related to the functioning of air transport) and warehousing, arts, entertainment and leisure, accommodation, wholesale and retail trade; Repair of cars and motorcycles. The decline in the hotels and restaurants sector was mainly due to the decrease in the number of international visitors. The number of visits made by international visitors has decreased by about 92 %, which has had an impact on the revenues of travel agencies and tour operators. The reasons for the decline in the arts, entertainment, and leisure sector are the declining revenues of both gambling-related companies and leisure, entertainment, sports, and cultural institutions.
Gogita Todradze, Director of Geostat said that despite the economic downturn, growth was observed in the processing industry, financial activities, information, and communication, as well as water supply, sewerage, and waste management. Growth was revealed in the manufacturing sector, and the main reason for this is the developments in the metallurgical industry. In particular, the production of cast iron, steel, and ferroalloys, as well as electrical conductors and cables has increased. Compared to the same period last year, exports of ferrosilicon manganese increased by about 3.5 times.
The reason for the growth in the financial sector is the increase in the %age of commercial income of commercial banks, which was partly related to the increase in the volume of long-term loans to individuals.
The growth in the information and communication sector was due to the increase in the turnover of companies engaged in information and communication activities.
"As for the water supply, sewerage, and waste management sectors, the growth trends were mainly related to waste collection, treatment and disposal activities," Todradze said.
In November 2020, exports of goods decreased by 13.4 % and imports by 12.1 %. As for the total 11-month foreign trade, exports fell by 11.3 %, while imports fell by about 16 %. In November 2020, about 3450 new enterprises were registered in the country and this figure is 11.4 % lower than the corresponding period of the previous year. The turnover of VAT-paying enterprises used in the preliminary assessment of economic growth decreased by 4.2 % and amounted to 7.3 billion GEL.
The decrease in trade was mainly related to the decrease in trade in passenger cars. The re-export rate of passenger cars decreased by about 62 %. Also, the retail trade in construction materials and alcoholic beverages, as well as the wholesale trade in petroleum products have been reduced to some extent.
The National Bank of Georgia (NBG) reported that annual inflation in November 2020 amounted to 3.8 %, and compared to October, prices increased by 0.9 %. Food is up 6.0 % year on year. From November 3.8 % inflation came 1.7 pp for food, of which only for cheese and oil - 0.6 pp. Among other products, a 10% increase in the price of cigarettes (up 0.3 pp) and a 41 % increase in the price of a marriage ring due to rising gold prices in the world market (up to 0.2 pp) are notable. Gasoline, diesel, and gas prices fell the most in November to reduce annual inflation by a total of 0.8 pp.
"Core inflation, which excludes high-volatility food, energy and tobacco prices from the consumer basket, has fallen to 4.8 %," the National Bank said in a review.
At the same time, according to the Central Bank, in November, annual inflation was 3.0 % for imported goods and 4.2 % for locally produced goods. Mixed goods rose 4.1 %.
In November 2020, the official international reserves of the National Bank decreased by $25.9 million. The decline in international reserves was affected by the National Bank's foreign exchange interventions and government foreign exchange expenditures.
According to them, in November, the NBG carried out four interventions and sold a total of $ 173,750,000 in the foreign exchange market. As of November 30, the total volume of international reserves is $ 3,751 billion.
