Page 6 - GEORptApr21

Georgia's exports decreased by 6.8% y/y in January-February to $494.7mn. However, domestic exports (which exclude re-exported goods) increased by 7.9% y/y to $369.0mn. They amounted to 74.6% of total exports, driven by exports of metal ores to China. Direct exports have now been on the rise for four years, moving up 50% since 2016.
Meanwhile, the National Bank of Georgia (NBG) hiked its key rate, the refinancing rate, at its March 17 monetary policy board meeting by 50bp to 8.5%, explaining that low inflation (3.6% y/y in February) was only a transient effect of energy price subsidisation. NBG, in explaining its monetary policy tightening, is citing risks of imported inflation and high dollarisation that facilitates the strong pass-through of exchange rate variations to consumer prices.
On the political front, the ruling Georgian Dream party and opposition parties in Georgia have failed to agree with a solution to the country’s political crisis as proposed by Christian Danielsson, EU Council President Charles Michel’s personal envoy.
Georgian Parliament Speaker Archil Talakvadze on March 25 reiterated that the ruling Georgian Dream party will not consider holding a repeat general election or the release of opposition United National Movement (UNM) president Nika Melia. On February 23, Melia was detained amid a situation in which the opposition parties have been boycotting the parliament, claiming last autumn’s general election was fixed in Georgian Dream’s favour. He was taken into custody after allegedly refusing to post bail on charges of organising and using group violence during June 2019 protests in Tbilisi, charges he claims are politically motivated.
Georgia’s prime minister Giorgi Gakharia resigned on February 18 after condemning an “unacceptable” court ruling ordering the pre-trial detention of opposition leader Nika Melia.
Georgia’s new PM, Irakli Garibashvili, said in one of his first statements as head of the Georgian Dream government that snap elections—the main demand from the opposition parties—were out of the question and that “ordinary criminal” Melia belonged in jail—he made that comment despite the fact Melia has not yet stood trial.
A quick resumption of the global tourism industry and the normalisation of relations between the ruling and opposition parties are the main elements that would in coming years address the damage inflicted on Georgia’s economy.
6 GEORGIA Country Report April 2021 www.intellinews.com