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• In July 2015, domestic production in Georgia increased by 3% annually, maintaining a stable and positive trend.
• Consumer price inflation reached the highest value (4.9%) in two years. The 1 August 2015 increase in electricity tariffs is likely to put some additional upward pressure on consumer price inflation in the coming months.
• Compared to the previous month, the value of the Georgian lari has stabilized against the dollar in July and appreciated slightly against the currency basket of Georgia’s trading partners.
• Export growth continued to decline in annual terms, reflecting the declining demand for Georgian exports from main trading partners, including Russia, Azerbaijan, Turkey and Ukraine.
• Bulgaria became Georgia’s fastest growing export destination in July.
• The new excise tax adopted by government at the beginning of the year increased annual tax income from excise by 44%, and contributed 37% to the total increase in government income from all taxes.
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After relatively high GDP growth in February and March, the Georgian economy slowed down considerably in April. According to Geostat’s rapid estimates, GDP grew by only 0.9% annually in the reporting month. Consequently, in the first four months of 2015 the Georgian economy expanded by 2.6%. ISET’s GDP forecast for the second quarter of 2015 is 5.1%, which seems to be rather overoptimistic given the grim start of the quarter.
The IMF’s estimated GDP growth for 2015 stands at about 2%; however, risks of downward pressure have recently increased. Moreover, the Business Confidence Index (BCI), ISET-PI’s quarterly publication reporting business’ expectations, hit its historical minimum in the second quarter of 2015. Meanwhile, the Consumer Confidence Index (CCI), another ISET-PI publication, has remained at its minimum level for four consecutive months.
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