Page 23 - GEORptMar21
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Georgia’s trade gap narrows as imports drop in Jan
Georgia’s exports in January decreased by 16.2% y/y to $224.4mn, national statistics office Geostat announced. Imports decreased by a similar rate (16.4%) to $539.4mn. The trade deficit in January thus amounted to $315mn, 16% less than recorded in the same month of 2020.
Georgia's trade deficit is a key issue in the country's macroeconomic fundamentals. The drying up of foreign exchange revenues from tourism amid the coronavirus pandemic have caused a major balance of payments problem. It has been tackled with substantial help from international financial institutions. Georgia's current account deficit (CAD) was estimated by Fitch Ratings - which affirmed the country's BB-.negative sovereign rating this month - to have widened to 12.0% of GDP in 2020 from 5.5% of GDP in 2019. Goods exports fell less than expected, helped by a relatively well-diversified group of main trading partners, the rating agency commented, and remittance inflows were surprisingly strong.
Fitch forecast Georgia's CAD would 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 added. "As was expected, we saw a decline in external trade in January as the third wave of the pandemic was raging in the world and external trade depends not only on the situation in Georgia but on external markets as well. Despite the decrease in exports and imports, the good thing is that the trade deficit has improved by $62mn . We expect to have a positive dynamic in the export of domestic produce," Georgian Economy Minister Natia Turnava said.
23 GEORGIA Country Report March 2021 www.intellinews.com