Page 23 - GEORptAug19

Georgia’s gaping trade deficit slightly narrows
This left Georgia with a trade deficit of $2.4bn in January-June 2019, equal to 40.5% of the country’s total trade turnover of $6.0bn.
The data released on July 15 only covered the headline figures, with no breakdown by type of goods or trade partners.
Georgia’s wide trade gap has gradually shrank since last October. In March 2019 it stood at only $419mn, 25% smaller compared to the same month of last year, preliminary data from statistics office Geostat show.
The exchange rate seems to have had a moderate if any impact on the trade balance: the local currency weakened by some 7.8% in real effective terms from August to November last year but stabilised afterwards. The current effective exchange rate is in line with the average of recent years.
The trade gap in the rolling 12 months ending March increased by only 2.4% y/y to $5.56bn. It was the lowest value seen since May 2018, but still one third of the country’s GDP estimated at nearly $17bn. Revenues from tourism and wage remittances are balancing the country’s deep deficit in trade with goods making it vulnerable in principle to external shocks—but for the time being the tourism outlook is robust and wage remittances keep growing.
5.1.2 Current account dynamics
Georgia’s current account deficit halves in Q1 on strong exports
Georgia’s current account (CA) deficit amounted to $227mn in the first quarter of 2019, 48% down y/y according to the central bank reporting under BPM5. The country's CA deficit narrowed in 2018 compared to 2017, but remains at a still high level of 7.7% of GDP ($1.24bn) and its dynamics depends to a large extent on the revenues generated by tourism.
Exports of goods increased by 12.5% y/y to $1.1bn, while imports of goods contracted by 3.3% y/y to $1.9bn. Notably, the balance of trade with goods improved despite the nominal and real strengthening of the local currency against a trade of currencies reflecting the country’s foreign trade, in the first quarter of this year compared to the same period of 2018.
The balance of goods remains the major contributor to the current account. Trade of goods deficit decreased, however, by 18.9% y/y and amounted to $799mn in the first quarter.
23 GEORGIA Country Report August 2019 www.intellinews.com