BAKU, Azerbaijan, Oct. 11
By Maryana Akhmedova – Trend:
Georgia’s TBC Capital published a weekly update on the country’s economic growth, Trend reports via TBC Capital.
According to the publication, low inflation was recorded in September 2021, for the first time this year, though only on a monthly basis.
Annual inflation was still high – at 12.3 percent, with seasonally adjusted and year-on-month inflation set at negative 2.5 percent. In line with expectations, despite high commodity prices and the rapid recovery of the economy, the Georgian lari exchange rate curbed the price growth with some time lag, the report said.
According to the TBC Capital, soaring natural gas tariff, as well as increased bread price in Georgia due to rising wheat and egg prices, are arguments for further inflationary pressures, as well as the still-growing diffusion index, which indicates widespread price increases on consumer goods and services and high inflation, often seen in the past.
Gas tariffs in Georgia have historically depended more on oil price dynamics than on the international price of natural gas. Consequently, only a relatively small increase is expected in this regard, TBC Capital said.
The producer price index increased only slightly in August 2021, which is an argument for the normalization of consumer price growth, as the producer price index often acts as a preemptive indicator, the report said.
TBC Capital also stated on the more or less stable exchange rate of the Georgian lari.
Given that the wheat price increase was already embedded in the TBC Capital forecast, the previous forecast did not change significantly.
TBC Capital forecast CPI inflation at 13.8 percent in 2021, and with close or below 6 percent target outlook for 2022, with stability in 2021 and a slight strengthening in 2022, keeping Brent crude oil and other commodity prices at current levels and assuming 10.5 percent GDP growth in 2021 and 6 percent – in 2022.
“Although the annual inflation is still high and is expected to increase further in December due to low base effect we believe September inflation dynamics together with the recovery in inflows make our arguments for no further rate hikes this year and rate cuts in 2022 scenario even stronger”, the TBC Capital concluded.
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