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Renaissance Capital forecasts inflation in Georgia to slow down

Georgia Materials 27 October 2021 17:30 (UTC +04:00)
Renaissance Capital forecasts inflation in Georgia to slow down

BAKU, Azerbaijan, Oct. 27

By Maryana Akhmedova – Trend:

Inflation in Georgia will likely slightly accelerate at the end of 2021 but should begin to slow down in early 2022, Trend reports via economic research of the Renaissance Capital investment banking company.

According to the research, the inflation in Georgia is predicted at 13.4 percent by the end of 2021 and at 3 percent at the end of 2022.

“End-year acceleration in inflation will likely be temporary, which should allow the refinancing rate to be cut by 200 basis points in 2022,” Renaissance Capital said.

The banking sector's risk metrics are improving, while foreign exchange adjusted portfolio growth continues at 14.1 percent year-on-year, despite tight monetary policy, the research said.

According to the Renaissance Capital, a slowdown in inflation should create significant potential for cuts in the refinancing rate.

“We expect the refinancing rate at 10 percent (the current level) by the end of 2021 and 8 percent by the end of 2022, the research said.

Meanwhile, according to the report, the recovery of external inflows, together with a decrease in political uncertainty, allows to expect Georgian lari to strengthen by 3 percent in 2021-2022.

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