In November, the economy grew by 12% compared to the same period last year. According to preliminary data from the National Statistics Office (Geostat), for the first eleven months of 2021, the average growth rate is 10.7%.
The growth in November 2021 was observed in the following sectors: manufacturing, transport, and warehousing, arts, entertainment and leisure, trade, hotels, and restaurants, financial and insurance activities. A decreasing trend was observed in the construction sector.
Based on this data Natia Turnava, Minister of Economy and Sustainable Development announced with certainty that Georgia will finish 2021 with double-digit economic growth. Turnava stressed that the main determinant of economic growth is the export of Georgian products, which is growing at a high rate, as well as the revival and recovery of tourism.
According to the Minister of Finance, Lasha Khutsishvili, export growth in November exceeded 40% and generally, there was a significant increase in foreign trade. The tourism sector has significantly increased, as well as remittances and tax revenues. In 2021, compared to 2019, the Georgian economy has grown by 3.2%. “This is against the background of the fact that we have substantially reduced the current account deficit, the budget deficit, and the volume of foreign debt to the economy,” he stressed.
According to the National Bank of Georgia (NBG), the current account deficit in the third quarter of 2021 amounted to $368.1 million - Goods and income accounts have a negative contribution to the formation of the current account, while trade in services and current transfers have a positive contribution. The current account deficit decreased by 35.5% year on year, while the ratio to GDP decreased from -13.2% to -7.2%.
According to the central bank, the largest component of the current account was still trade in goods, the negative balance of which increased by 29.7% year-on-year. At the same time, exports of goods increased by 23.1% year on year, while imports increased by 25.8%.
In the second quarter of this year, exports of passenger services were partially restored. This positive trend continued in the third quarter and amounted to $566.0 million, which is half of the corresponding period of 2019.
The net income account for the third quarter was $351.5 million. Positive net remuneration increased by 23.6% and negative net investment income increased by 53%.
According to the National Bank, the traditionally positive component of the current account is current transfers, whose credit grew by 23% in the third quarter of 2021. Private sector net transfers increased by 25.1%.
At the same time, net transfers from the government sector fell by 22.2%. Net foreign direct investment stood at $ 216.8 million in the third quarter or 4.2% of quarterly GDP.
According to Geostat, in December 2021, compared to the previous month, the inflation rate in Georgia was 0.3%, and the annual inflation rate was 13.9%. As for core inflation, this figure was 5.9% in December 2021 compared to the same period last year, while the annual core inflation rate without tobacco was set at 6%.
The percentage increase in prices compared to the corresponding month of the previous year are following: Food and non-alcoholic beverages - 15.6%; Alcoholic beverages, tobacco - 5.2%; Clothing and footwear - 2.8%; Housing, water, electricity, gas - 43.5%; Furniture, household items, home care - 11.8%; Health care - 7.9%; Transport - 17.3%; Recreation, entertainment and culture - 2.5%; ' Education - 4.8%; Hotels, cafes and restaurants - 14%; Various goods and services - 6%.
NBG President Koba Gvenetadze announced that the increase in annual inflation in December, compared to November, didn’t exceed expectations.
“As early as the spring of 2021, the NBG was highlighting the simple arithmetic effect that would result from the utility tax subsidy and its subsequent abolition. Numerous releases from the Monetary Policy Committee last year indicate that in December 2021 and January-February 2022, annual inflation would be high and then begin to decline,” Gvenetadze wrote, adding that the rate of inflation, on the background of the pandemic represents a global challenge.
