BAKU, Azerbaijan, April 29
By Tamilla Mammadova – Trend:
According to the baseline forecast scenario, it is expected that inflation will get closer to target forecast in Georgia, Trend reports via the National Bank of Georgia (NBG).
In order to ensure this, monetary policy will maintain tight stance so that short-term inflation fluctuations do not adversely affect longer-term expectations thereby safeguarding the goal of achieving the target.
According to the same forecast, in 2021, despite weak external demand, the Georgian economy will grow by 4 percent amid relatively strong domestic demand.
The COVID-19 pandemic had a significant impact on headline inflation. Last year, amid sharp decline in foreign inflows, lari exchange rate has depreciated as well, consumer prices were significantly affected.
Moreover, due to COVID-19 pandemic-related restrictions, disruptions in supply chains and higher production costs exerted an upward pressure on inflation, which was only partially offset by weak aggregate demand.
In the current period, these factors are still notable together with sharply rising commodity prices in the international markets - being eventually transmitted to local prices, the bank said.
"It should be noted that the short-term inflation fluctuations were also driven by the social program implemented by the government: under the subsidies for utility bills, inflation rate fell at the end of 2020 before rising again with the termination of the program in March, 2021," the NBG said.
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