Baku, Azerbaijan, August 2
By Tamilla Mammadova – Trend:
The growth of economic activity in Georgia in the first five months of 2019 was 4.9 percent compared to the same period of 2018, Trend reports with reference to the National Bank of Georgia.
Against the background of the expected weakening of external demand, the revised estimate is that real GDP growth in 2019 will be 4.5 percent.
In addition, the current nominal effective exchange rate is likely to be more depreciated by current external shocks. Consequently, a possible strengthening of the nominal effective exchange rate will lead to a decrease in the level of inflation.
Thus, the bank’s monetary policy committee at this stage found it advisable to leave the rate unchanged. However, if the pressure on the exchange rate on inflation continues, the bank will consider the possibility of tightening the policy.
The current baseline scenario of the National Bank suggests a gradual reduction in the discount rate in the medium term.
According to the bank, at the beginning of the year, lending of the economy grew at a moderate pace. The annual growth of the loan portfolio in June, excluding the impact of the exchange rate, was 14 percent, which is moderate for the Georgian economy. It is noteworthy that the growth of the loan portfolio is mainly due to the growth of loans in national currency.
It should be noted that core inflation, which excludes the prices of food, energy and tobacco, is 1.4 percent. This indicates that the increase in inflation is temporary and that price stability will continue in the future.