Page 30 - GEORptSep21

Georgia’s current account gap surges to 12.3% of GDP in 2020
revenues. The slight narrowing of the trade gap (goods) was no surprise given subdued domestic demand correlated with scarce revenues from pandemic-hit tourism. The central bank's defence of the exchange rate and steady wage remittances maintained net imports at high levels, though.
In January-June this year, the foreign trade turnover was $6.2bn – an increase of 21.3% compared to the same period of last year.
Exports increased by 25.5% y/y reaching $1.9bn (+5.5% versus H1, 2019), while imports increased by 19.5% y/y (-1.6% versus H1, 2019) to $4.3bn.
Meanwhile, the trade deficit widened by 15% y/y at $2.4bn and it was 6.5% smaller than in the same period of 2019. As a share of GDP, the trade gap already neared 15% in the first half of the year.
Georgia’s current account deficit amounted to $2.0bn, or 12.3% of GDP in 2020. That's marked down as more than double the $891mn (5.3% of GDP) deficit recorded in 2019 and slightly worse than the latest forecast from Fitch Ratings (prediction: 12% of GDP), according to a statement of the National Bank of Georgia (NBG).
The International and Monetary Fund (IMF) under the latest Article IV Consultations with the South Caucasus country projected the current account deficit improvement to 9.9% of GDP in 2021, compared to its elevated level in 2020, due to early signs of a faster than expected rebound in growth and tourism.
Shrinking tourism revenues amid the coronavirus pandemic were mainly responsible for the deterioration in Georgia’s external position. To offset the loss of forex revenues from tourists and the expected impact on the balance of payments, the government borrowed heavily last year.
Georgia currently owes $20.3bn in external debt, according to NBG data.
The external debt to GDP ratio hit 125% in 2020.
Fitch Ratings in February forecast that Georgia's current account deficit will widen to 12.5% of GDP in 2021, before narrowing to 7.9% in 2022. A domestic-driven recovery and a weak outlook for tourism would mean a higher pace of growth in imports than exports, it said.
30 GEORGIA Country Report September 2021 www.intellinews.com