Page 21 - GEORptApr21

OUTLOOK: The central bank has a refinancing rate of 8.0%. Although inflation has declined as demand has weakened, the scope for relaxing monetary policy is limited. The authorities must balance the need to support economic activity against the risk of renewed exchange rate pressures in the context of strong exchange rate pass-through and high financial dollarisation. The widening of the output gap and limited depreciation pressures (in nominal effective terms) are projected to pull inflation below 3% in 2021H1 before inflation starts increasing and reaches the target by end-2021 as demand recovers.
4.2.2 PPI dynamic
Georgia’s PPI for industrial products up 11.7% y/y in December
Georgia’s Producer Price Index (PPI) for industrial products increased by 11.7% y/y in December 2020, the most since June, following a 10% rise in the previous month. On a monthly basis, producer prices rose 1.1% in December, after a rise of 2.4% in November.
21 GEORGIA Country Report April 2021 www.intellinews.com