Page 29 - GEORptJun22

5.1.2 Current account dynamics
Georgia’s current account deficit fell to 9.8% of GDP in 2021
Georgia’s current account deficit was reduced to 9.8% of GDP in 2021, according to broker Galt & Taggart.
The current account deficit fell by 6.4% y/y to 9.8% of GDP in 2021, down from 12.4% of GDP in 2020, according to NBG. The improvement in the balance was supported by strong growth in transfers (up 27.2% y/y to $2.3bn, 12.3% of GDP), followed by a recovery in the service balance (reflecting the gradual rebound in tourism revenues, amounting to $1.2bn in 2021, 38.1% of the 2019 level).
Meanwhile, the merchandise trade deficit, traditionally the major contributor to deficit creation, widened by 18.8% y/y to $3.8bn, as exports increased by 27.4% y/y and imports were up 23.8% y/y. Notably, other investments at $1.8bn (9.5% of GDP) and net FDI at $830.8mn (4.4% of GDP) exceeded the current account deficit by 1.4x y/y, resulting in reserves accumulation of $452.6mn in 2021.
Georgia’s economy grew by 14.6% y/y in February, after a 18.0% y/y growth in the previous month, based on Geostat’s rapid estimates. Cumulatively, in 2M22, growth came in at 16.3% y/y. In February, growth was recorded in manufacturing, transportation & storage, electricity & gas supply, hotels & restaurants, real estate, arts, entertainment & recreation and mining sectors.
Georgia and the IMF also concluded a staff-level agreement on a 3-year $289mn programme. The fund-supported arrangement is subject to approval by the IMF Executive Board, which is expected to consider it in May. The programme would help Georgia maintain and further entrench macroeconomic and financial stability amidst back-to-back shocks, and achieve stronger and more inclusive growth.
29 GEORGIA Country Report June 2022 www.intellinews.com