Page 19 - GEORptOct21

4.0 Real Economy 4.1 Industrial production
Industrial production jumps 13.6% y/y in 1Q21
Georgia’s industrial production surges 13.6% in the first quarter of 2021, up from a rise of 5.8% in the previous quarter, according to the National Statistics Office of Georgia. Production expanded at a faster pace for almost all sectors such as manufacturing, mining and utilities.
4.2 Inflation 4.2.1 CPI dynamics
Georig’s inflation soars to 12.8% y/y in August
Galt & Taggart sees double digit inflation in Georgia by year end
Georgia’s annual inflation, at 12.8% in August, was higher than expected compared to 9.9% y/y in June. The driving forces of high inflation are still predominately one-off and independent from monetary policy. According to preliminary estimates, the contribution of such exogenous factors to headline inflation is about nine percentage points, the National Bank of Georgia (NBG) said.
Georgia’s consumer price inflation came in at 9.9% year on year in June, a major 2.2pp rise from 7.7% y/y in the previous month, according to Geostat. Core inflation (non-food, non-energy) was down to 5.9% y/y from 6.5% in May and 6.9% in March-April, though. Core inflation excluding tobacco was 5.8% in June, also down from 6.9% in April.
Notably, the national currency has strengthened significantly in June versus the US dollar, to 3.16 GEL to USD from 3.38 in May and 3.44 in April, easing the pressures exerted by expected inflation.
Assessing Georgia's annual inflation outlook, Galt & Taggart has forecast that the country's average rate will be 8.3% this year, according to an analyst at the investment bank, Lasha Kavtaradze, as cited by Business Media.
This is 1pp above the forecast lately put out by the International Monetary Fund (IMF) and suggests that the central bank may have to further hike its key
19 GEORGIA Country Report October 2021 www.intellinews.com