Page 15 - Caucasus Outlook 2024

The cumulative FDI for the first three quarters amounted to $1.4 billion, reflecting a decrease of $399 million or 22% compared to the previous year.
Detailed statistics reveal that the decline in investments during the third quarter was primarily due to the cancellation of debt obligations, totalling $603 million.
In Q3 2023, the United States was the top foreign direct investor in Georgia with $51.8 million (16.4%). The United Kingdom followed with $45.8 million (14.5%), and the Netherlands came third with $45.3 million (14.3%). Together, these three countries accounted for 58.7% of the total investment.
The financial and insurance activities sector received the largest share of FDI in Q3 2023, totalling $80.2 million (25.4%). The transport sector came second with $61.9 million (19.6%), and the Information and communication sector ranked third with $41.0 million (13.0%). These top three sectors comprised 77.3% of the total investment.
2.1.3 Inflation and monetary policy
Georgia witnessed a swift reduction in high inflation from April 2023. As of November, Georgia continues to experience low inflation, maintaining a rate well below the target of 3%, with the annual inflation rate at 0.1%.
The aftermath of the pandemic and the ongoing Russia-Ukraine conflict are helping to keep a cap on price pressures. On top of that, the National Bank of Georgia is playing its part by sticking to a tight monetary policy, with the monetary policy rate holding steady at 10%. This means they're not letting the money supply grow too fast, which would push prices higher.
Annual inflation was primarily shaped by price shifts in key categories: Miscellaneous goods and services: prices surged by 9.8%, contributing a 0.52% rise in the annual index (notably, financial services spiked by 26.3%). Transport: a 2.5% uptick in prices contributed 0.37% to the overall index (transportation services rose by 4.3%, purchase of vehicles by 2.9%). Housing, water, electricity, gas: prices increased by 3.4%, contributing 0.35% to annual inflation.
Natia Turnava, the acting president of the National Bank of Georgia, said inflation is anticipated to remain below the target rate throughout 2023 and is expected to stabilise at the target rate in 2024.
Regarding the national currency, the Lari has exhibited relative stability against the US dollar over the past year, with the exchange rate fluctuating around 2.66.
15 Central Asia & Caucasus Outlook 2021 www.intellinews.com