Page 30 - GEORptAug21

5.1.2 Current account dynamics
Georgia’s foreign trade in first half up 21.3% y/y
Georgia’s current account gap surges to 12.3% of GDP in 2020
Georgia's foreign trade in the first six months of 2021 increased by over one-fifth year-on-year, Geostat reported on July 13.
Furthermore, it was 0.5% above the pre-coronavirus crisis trade turnover seen in H1 2019.
Compared to the first half of 2019, Georgia’s exports increased and imports decreased, resulting in a slightly smaller trade deficit - which has not improved significantly the country’s dependence on wage remittances and tourism 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
30 GEORGIA Country Report August 2021 www.intellinews.com