Dec 31, 2018

GDP increased by 2.2% YoY in November 2018

Quick Update

  • According to the initial estimates of Geostat, real GDP growth slowed to 2.2% YoY in November 2018 compared to 6.7% in October 2018.
  • The growth of turnover of companies paying VAT also slowed to 5.4% YoY in the same month.
  • According to Geostat, trade, real estate, financial and other services contributed positively to economic activity, while decrease in construction sector affected growth negatively in November.
  • A slower growth in November also reflects some moderation in consumer and business sentiment to be attributed to higher USD/GEL volatility in the same month. In addition, front-loaded loan growth in October triggered by the expected NBG regulation resulted in relatively low lending growth in November, partly explaining slower GDP growth. Declined imports in November (-3.1% YoY) also indicating slower domestic demand.
  • Fiscal balance turned to only moderate deficit in November from surplus registered in October as well as in November 2017. The positive impact of relatively loose fiscal stance on growth should become more visible in coming months.
  • Growth of exports (+19.6% YoY in USD), tourism (+12.5% YoY in USD) and remittance (+9.0% YoY in USD) inflows were reasonably strong in November. Though exports growth was led mostly by the categories with large share of re-exports (see quick update on trade in goods). On the back of higher inflows and weak domestic demand, NBG continued to refill international reserves and purchased 20 mln USD in November, equivalent to an estimated 1.5% of the same month GDP.