Page 23 - GEORptFeb21

unchanged at 8.0%.
Despite low inflation of 3.8%, which is not expected to budge much in coming quarters, the NBG rate-setters found grounds to keep to their hawkish policy rate and even mentioned the option of further hiking it.
“According to the current estimates, a tight monetary policy may be necessary for longer, subject to inflation expectations and the dynamics of economic activity. Depending on the economic developments, the [monetary policy] Committee does not rule out the need for an increase in the interest rate in the future,” a press release read.
The central bank has sold foreign exchange reserves of $843mn in 25 auctions held since March.
The IMF statement said Georgia’s fiscal response to the COVID-19 pandemic helped reduce its economic and social impact, with the 2021 state budget further aiding the economic recovery.
Moreover, it highlighted structural reforms, including in the judiciary, as a path to improving the business environment and enhancing private sector-led growth.
Under the EFF arrangement, Georgia has so far received special drawing rights to foreign exchange reserve assets of some $585mn.
5.1.1 ​Import/export dynamics
Georgia’s domestic exports up 3.5% y/y in 2020
Georgia’s foreign trade deficit shrinks
Georgia’s domestic exports, which exclude exports of goods that are re-exported, increased by 3.5% y/y in 2020 to more than $2.4bn, driven by exports of metal ores to China, according to data released by statistics office Geostat.
Direct exports have now been on the rise for four years, moving up 50% since 2016. Total exports in 2020, however, contracted by 12% y/y to $3.34bn. Georgia’s direct exports to China soared by 127% y/y to nearly $460mn (19% of the total). Total exports were reported at $476mn (113% up y/y).
By items exported, the most marked increases was posted in copper ores and concentrates (+12.3% to $729mn) and precious metal ores and concentrates (+751% y/y to $90mn).
Total imports decreased by 15.9% y/y last year to $8bn, resulting in a trade gap of $4.66bn, down from $5.72mn in 2019.
The foreign trade deficit of Georgia has narrowed significantly since the pandemic began, with the gap decreasing by 29% y/y to $1.66bn in the
23​ GEORGIA Country Report​ February 2021 ​ ​www.intellinews.com