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TBC Research: PPI increases inflationary pressure in Georgia

Business Materials 26 May 2020 16:49 (UTC +04:00)
TBC Research: PPI increases inflationary pressure in Georgia

BAKU, Azerbaijan, May 26

By Tamilla Mammadova – Trend:

The Producer Price Index (PPI) growth accelerated to 10.1 percent yеаr-оn-year in April 2020 in Georgia, hinting on the increasing inflationary pressure in the country, Trend reports with reference to TBC Research Group at Georgian TBC Bank.

As reported, compared to the previous month, in April 2020 PPI rose by 1.5 percent, with prices growing sharpest for electrical equipment (+15.8 percent month-on-month) and metal products (+10.5 percent month-on-month).

Real Effective Exchange Rate (REER) was down by 1.1 percent month-on-month in April 2020 as it declined by 5.7 percent yеаr-оn-year. Changes in lari real exchange rate with the main trade currencies were as follows: lari/USD depreciated 9.5 percent yеаr-оn-year, lari/euro depreciated 6.5 percent yеаr-оn-year, lari/TRY was down 2.8 percent yеаr-оn-year, while lari/RUB appreciated 2.4 percent compared to April 2019.

Exports of goods fell by 27.9 percent yеаr-оn-year in April 2020 as exports dropped sharply both to the CIS countries (-42.7 percent yеаr-оn-year) and to EU (-46.6 percent yеаr-оn-year), but increased to other countries (+30.6 percent yеаr-оn-year), mostly on the back of higher exports to China (+292.8 percent yеаr-оn-year), US (+182.8 percent yеаr-оn-year), and Switzerland (+86.9 percent yеаr-оn-year).

Sharp decrease was observed for exports of cars (-86.8 percent yеаr-оn-year), medicaments (-22.3 percent yеаr-оn-year) and wine (-22.2 percent yеаr-оn-year), while the exports of ferro-alloys (+55.5 percent yеаr-оn-year) and gold (+102.6 percent yеаr-оn-year) increased sharply.

Imports of goods also declined (-38.5 percent yеаr-оn-year), primarily reflecting falling imports of transport equipment (-69.9 percent yеаr-оn-year) and capital goods (-55.6 percent yеаr-оn-year). Lower imports of fuels (-51.4 percent yеаr-оn-year), industrial supplies (-31.4 percent yеаr-оn-year), and consumer goods (-30.4 percent yеаr-оn-year) also significantly contributed to the overall decline.

On the other hand, imports of food products increased by 1.6 percent yеаr-оn-year, explained by continuation of the one-off jump in demand relating to the uncertainties caused by COVID-19.

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