Page 17 - bne IntelliNews George country report Sept 2017

Economic growth in Caucasus to remain subdued in 2017, EBRD forecasts
threat to macroeconomic stability; low levels of asset quality are of particular concern in Azerbaijan, where problem loans constitute 30% of lenders’ portfolios, according to Moody’s.
Meanwhile, Georgia’s dependence on external funding could pose a risk looking ahead, the Global Economic Prospects report concludes.
Growth in the Caucasus and Eastern Europe will pick up from 0% in 2016 to 1.1% in 2017 and 2.4% in 2018, the European Bank for Reconstruction and Development (EBRD) has forecast in its latest Regional Prospects Report published on May 10.
The fastest-growing economies in the sub-region this year are expected to be Georgia (3.9% GDP growth forecast) and Moldova (3%); meanwhile, Belarus and Azerbaijan are expected to remain in recession this year, with economic contractions of 0.5% y/y each.
Georgia's GDP growth slowed slightly to 2.7% y/y in 2016, from 2.9% in 2015, but it is expected to bounce back to 3.9% y/y in 2017 and 4.2% in 2018 on the back of a recovery in consumption and strong domestic and foreign investment in infrastructure and other sectors, the EBRD said.
While economic growth picked up in the second half of 2016, exports were down by 4% in 2016, following a 23% drop in 2015. However, other areas of the economy have performed well. Despite a 40% depreciation of the lari in 2015-2016, the rate of non-performing assets in the banking sector remained low at just 3.8%. And, following a 25% decline in remittances in 2015, they picked up by 6% y/y in 2016.
Georgia's deep and comprehensive free trade agreement (DCFTA) with the EU and the fact that the country was granted a visa-free regime with Brussels in March are contributing to investor confidence in the country, the development bank's report concluded
4.0 Real Economy 4.1 Industrial production
Industrial production surges 22.6% y/y in 1Q17
Georgia’s industrial production climbed 22.6% y/y in the first quarter of 2017, compared to 9.1% in the previous period, according to the National Statistics Office of Georgia.
It was the strongest rise since 2011 as output rose at a faster pace for manufacturing (22.7% in 1Q17 from 10.8% in 4Q16) and electricity, gas and water supply (up 25.9% in 1Q17 from 11.4%), while output rebounded for mining and quarrying (11.1% in 1Q17 from -1.8% in 4Q16).
Meanwhile, production slowed for water supply sewerage, waste management and remediation activities (7.2% in 1Q17 from 26.6% in 4Q16).
17 GEORGIA Country Report September 2017 www.intellinews.com