Page 25 - GEORptFeb22

5.1.2 Current account dynamics
Georgia’s current account deficit moderates in Q3 as tourism revenue recover
Georgia’s current account deficit contracted by 35% y/y in the third quarter of 2021 to $371mn, the smallest gap in the past two years, as tourism revenues soared 13 times y/y to $566mn, according to data from the National Bank of Georgia (NBG).
The constantly increasing remittances from abroad ($659mn in Q3, +23% y/y) and the wide net import of goods ($1.0bn in Q3) are key elements shaping Georgia’s current account, but the tourism revenues have driven the dynamics of the balance over the past several years. Georgia’s current account gap was gradually narrowing, driven by stronger tourism revenues, before the pandemic crisis (from 12.5% of GDP in 2016 to under 5% of GDP around mid-2019).
Compared to the third quarter of 2019, the revenues generated by tourism in Q3, 2021 were still only half, despite the 13-fold advance. Two years ago (in Q3, 2019), when the tourism revenues were robust ($945mn) and on an upward trajectory, the country’s current account posted a small surplus of $17mn.
It was for the second time that Georgia’s external balance posted a surplus – after a similar performance announced in Q3, 2018. Seasonally, tourism revenues are large in the third quarter of the year.
But the beginning of the COVID-19 crisis has dragged down the revenues generated by tourism close to zero in four consecutive quarters (starting Q2, 2020). Only the second quarter of 2021 market significant recovery in this regard.
Over the four-quarter period to September 2021, the current account gap in Georgia was $1,850mn – or 10.6% of GDP – down from $2,053mn (12.3% of GDP) in the four-quarter period to June 2021.
During four quarters of quasi-inexistent tourism activity, Georgia’s four-quarter current account deficit more than doubled from $830mn (as of Q3, 2019) to nearly $2bn (as of Q3, 2020), before starting to decline only in the third quarter of 2021.
Strrong advance of non-tourism exports, gradual recovery of tourism
25 GEORGIA Country Report February 2022 www.intellinews.com