May 2, 2019

GDP increased by 6.0% YoY in March 2019

Quick Update

  • According to the initial estimates, real GDP grew by solid 6.0% YoY in March 2019, 1.4 PP higher compared to the increase in February. Average growth in Q1 2019 amounted to 4.7% YoY.
  • Exports, tourism and remittances inflows went up by 19.7% YoY in GEL terms in March. Measured in EUR and USD, inflows increased respectively by 18.6% and 8.9% YoY indicating external demand also remained supportive to the strong GDP growth  (see note on trade, remittances and tourism). At the same time, probably even after adjustment for the one-offs, imports were not as high as 6% GDP growth and higher re-exports would imply.
  • Fiscal stimulus remained strong in March (see note on fiscal) with significant positive contribution to growth. Consolidated budget posted a deficit of 29.6 mln GEL in March 2019 compared to the surplus of 80 mln GEL an year ago. Change in budget balance amounted to 110 mln GEL – an estimated 3.5% of the same month GDP. Impact of sizeable advance payments in December 2018 is also affecting the growth positively with the strongest effect on the economy to be materialized likely from Q2 2019.
  • Despite overall strong growth, construction continued to decline likely reflecting the weaker residential and non-residential buildings development* related to the stricter regulations to obtain construction permits and the expected slowdown in mortgage lending (see note on credit growth). In addition, drop in transport infrastructure construction related to the finalization of BP’s SCPX project continues to negatively affect the construction sector dynamics.
  • Following the sizeable FX interventions in Jan-Feb (see note on interventions), NBG has not intervened on FX market in March 2019.