BAKU, Azerbaijan, May 6
By Tamilla Mammadova - Trend:
Georgia’s economy contracted by 2.7 percent year-on-year in March 2020 after growing by 2.2 percent year-on-year in previous month, Trend reports citing Georgian Galt & Taggart investment company.
As reported, real growth was recorded only in construction and information and communications sectors.
Meanwhile, real growth was down in all other sectors, reflecting pandemic effects on the economy. Overall, real GDP growth was 1.5 percent year-on-year in the first quarter of 2020.
Monthly rapid estimates are based on VAT turnover, fiscal and monetary statistics.
In March 2020, the banking sector loan portfolio increased by 17.1 percent year-on-year after growing by 18.1 percent year-on-year in previous month, excluding the exchange rate effect.
In unadjusted terms, loan portfolio was up by 30.7 percent year-on-year and up by 10.6 percent month-on-month to 35 billion lari ($10.7 billion).
Deposits were up by 10.1 percent year-on-year excluding the exchange rate effect. In unadjusted terms, deposits were up by 24.8 percent year-on-year and up by 8.9 percent month-on-month to 28.9 billion lari ($8.8 billion).
Loan dollarization stood at 58.5 percent (+2.57 percentage points year-on-year and +4.23 percentage points month-on-month) and deposit dollarization was 66.3 percent (+4.26 percentage points year-on-year and +4.59 percentage points month-on-month).
On 27 April 2020, the National Bank of Georgia (NBG) intervened on the Foreign Exchange (FX) market and sold $20 million to limit lari volatility. This was fourth FX intervention in 2020 for a total of $120 million sale.
At its meeting on 29 April 2020, NBG’s monetary policy committee decided to reduce its policy rate by 50 percentage points to 8.5 percent.
According to NBG, supply factors caused by logistical constraints will delay the reduction of inflation in the coming months, however a sharp decline in external and domestic demand due to the COVID-19 pandemic will put a downward pressure on inflation throughout the year.
Therefore, NBG started to exit the tight monetary policy stance gradually and further steps will depend on how quickly inflation expectations recede. According to NBG's forecast, due to temporary factors, inflation will remain high for several months, then gradually decline, and approach the target level in first half of 2021.
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