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Economics
NBG Sold USD 60 MLN At The Foreign Exchange Auction

The aim of this intervention was to mitigate the potential negative impact on market expectations resulting from large one-time transactions.Large one-time transactions, particularly those by the financial sector, such as the repayment of GEL-denominated liabilities issued in previous years or the payment of dividends, temporarily increase the demand for foreign currency in the foreign exchange market. To prevent these transactions from causing excessive exchange rate fluctuations, the National Bank of Georgia provides foreign currency to the market through currency auctions as needed.

1718197888

Global Growth Is Stabilizing for the First Time in Three Years

Global growth is projected to hold steady at 2.6% in 2024 before edging up to an average of 2.7% in 2025-26. That is well below the 3.1% average in the decade before COVID-19. The forecast implies that over the course of 2024-26 countries that collectively account for more than 80% of the world’s population and global GDP would still be growing more slowly than they did in the decade before COVID-19.Overall, developing economies are projected to grow 4% on average over 2024-25, slightly slower than in 2023. Growth in low-income economies is expected to accelerate to 5% in 2024 from 3.8% in 2023. However, the forecasts for 2024 growth reflect downgrades in three out of every four low-income economies since January. In advanced economies, growth is set to remain steady at 1.5% in 2024 before rising to 1.7% in 2025.“Four years after the upheavals caused by the pandemic, conflicts, inflation, and monetary tightening, it appears that global economic growth is steadying,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President. “However, growth is at lower levels than before 2020. Prospects for the world’s poorest economies are even more worrisome. They face punishing levels of debt service, constricting trade possibilities, and costly climate events. Developing economies will have to find ways to encourage private investment, reduce public debt, and improve education, health, and basic infrastructure. The poorest among them—especially the 75 countries eligible for concessional assistance from the International Development Association—will not be able to do this without international support.”This year, one in four developing economies is expected to remain poorer than it was on the eve of the pandemic in 2019. This proportion is twice as high for countries in fragile- and conflict-affected situations. Moreover, the income gap between developing economies and advanced economies is set to widen in nearly half of developing economies over 2020-24—the highest share since the 1990s. Per capita income in these economies—an important indicator of living standards—is expected to grow by 3.0% on average through 2026, well below the average of 3.8% in the decade before COVID-19.Global inflation is expected to moderate to 3.5% in 2024 and 2.9% in 2025, but the pace of decline is slower than was projected just six months ago. Many central banks, as a result, are expected to remain cautious in lowering policy interest rates. Global interest rates are likely to remain high by the standards of recent decades—averaging about 4% over 2025-26, roughly double the 2000-19 average.“Although food and energy prices have moderated across the world, core inflation remains relatively high—and could stay that way,” said Ayhan Kose, the World Bank’s Deputy Chief Economist and Director of the Prospects Group. “That could prompt central banks in major advanced economies to delay interest-rate cuts. An environment of ‘higher-for-longer’ rates would mean tighter global financial conditions and much weaker growth in developing economies.”The latest Global Economic Prospects report also features two analytical chapters of topical importance. The first outlines how public investment can be used to accelerate private investment and promote economic growth. It finds that public investment growth in developing economies has halved since the global financial crisis, dropping to an annual average of 5% in the past decade. Yet public investment can be a powerful policy lever. For developing economies with ample fiscal space and efficient government spending practices, scaling up public investment by 1% of GDP can increase the level of output by up to 1.6% over the medium term.The second analytical chapter explores why small states—those with a population of around 1.5 million or less—suffer chronic fiscal difficulties. Two-fifths of the 35 developing economies that are small states are at high risk of debt distress or already in it. That’s roughly twice the share for other developing economies. Comprehensive reforms are needed to address the fiscal challenges of small states. Revenues could be drawn from a more stable and secure tax base. Spending efficiency could be improved—especially in health, education, and infrastructure. Fiscal frameworks could be adopted to manage the higher frequency of natural disasters and other shocks. Targeted and coordinated global policies can also help put these countries on a more sustainable fiscal path.

1718197689

Georgia’s Pension Agency says fund’s net asset value at USD 1.83bln

The Agency revealed the figure on Tuesday, and said the real - inflation-adjusted - holdings of the portfolios between its launch in August 2023 and May 31, 2024 were as follows: Conservative portfolio: 7.68% Balanced portfolio: 9.72% Dynamic portfolio: 11.04% The Agency said the pension scheme involved 1.519 million registered citizens, with 10,356 of them having retired since the scheme’s adoption in 2019.Pension savings withdrawn since the date amount to GEL 35.3 million, the Agency also noted in its figures.

1718196241

The fall of shares of Georgian companies has slowed down on the LSE -...

Bank of Georgia Group (BGEO LN) shares closed at GBP 37.40/share (+0.81% w/w and -20.09% m/m). More than 472k shares traded in the range of GBP 36.45 - 38.60/share. Average daily traded volume was 144k in the last 4 weeks. The volume of BGEO shares traded was at 1.04% of its capitalization.TBC Bank Group (TBCG LN) closed the week at GBP 25.25/share (- 0.98% w/w and -12.33% m/m). More than 271k shares changed hands in the range of GBP 25.05 - 26.20/share. Average daily traded volume was 125k in the last 4 weeks. The volume of TBCG shares traded was at 0.49% of its capitalization.Georgia Capital (CGEO LN) shares closed at GBP 8.70/share (-8.42% w/w and -24.35% m/m). More than 1.43mn shares traded in the range of GBP 8.70 - 9.75/share. Average daily traded volume was 165k in the last 4 weeks. The volume of CGEO shares traded was at 3.36% of its capitalization.

1718086185

FDI Down By 64.4% In 1Q24 Y-O-Y

According to the document, the Türkiye reaching USD 42.4 million in Q1 2024 (21.0 percent) was the major foreign direct investor country. Czech Republic was the second with USD 41.5 million (20.6 percent), followed by the United states with USD 33.7 million (16.7 percent). The share of the 5 largest investor countries is 85.5 percent of the total investment.The largest share of FDI was registered in the energy sector, reaching USD 78.7 million (39.1 percent) in Q1 2024, trade sector was the second with USD 39.5 million (19.6 percent), followed by the transport sector with USD 38.8 million (19.3 percent).

1718085848

Monetary gold rose to 15% towards the foreign exchange reserves

Gold in relation to foreign currency reserves, added by the NBG in March this year, has increased to 15%. The share in total reserve assets ($4.6 billion) is 11.7%.The NBG purchased $0.5 billion of 7 t 999.9 grade monetary gold in the form of bars of international standards in London.The National Bank of Georgia offered USD 60 million at the foreign exchange auction on Tuesday, of which USD 48.70 million was sold.The Bank said the average weighted rate of the operation was 2.7829. In today's currency rates, USD 1 costs GEL 2.7680, while EUR 1 costs GEL 3.0058.GEL lost up to 1% of its value in one week (-0.99%) and will start the new week at the rate of $1/GEL 2.8247.NBG’s activities on Bmatch are reduced in May. And in April, according to NBG's monthly review, with domestic government conversions in the banking system, NBG's net foreign exchange sales amounted to 68.3 million USD. Net purchases on BMatch were $73.1 million.Through domestic government conversions, foreign exchange interventions and the BMatch mechanism, net foreign assets increased by more than $35 million in April, but decreased by more than $200 million in May.

1718085589

The NBG's share in the foreign exchange market has decreased

The decrease was USD 39.2 million compared to the previous month, while USD  168 million y-o-y.99% of the activity in the foreign exchange market comes from spot transactions and amounts to USD 3.2 billion. Compared to March, it has increased by USD 228 million.The share of the National Bank of Georgia in total trade was 2.3%. On Bmatch, the NBG bought USD 73.1 million (net). Net foreign exchange purchases of the previous month (March) were up to 130 million.NBG's share in total foreign exchange trade by months (2024-2023)

1717674807

Banks' contributions to the budget will exceed half a billion

The sector is the main contributor to the budget. Commercial banks, similarly to other companies, are required to pay profits 4 times a year (although replenishing the balance before the deadline is not limited).According to the Tax Code, the deadline for submitting the 2024 declaration is until April 1, 2025, the profit tax divided into 4 (25%+25%+25%+25%) is paid no later than 05/15; 07/15; 09/15 and 12/15 .Banks pay profit tax at an increased rate of 20%. However, after many years of waiting, the sector has come to terms with the fact that the preferential rate on reinvested profit tax, postponed until 2023, will never come into force.Analysts expect more than half a billion in 2025 from 2024 profits. In 2024, 8 million was lack to a profit tax of 0.5 billion GEL.Banking sector profit tax by month

1717593793

NBG Acting President meets IMF Mission Head

According to the NBG press office, the parties reviewed the macroeconomic environment in Georgia, the NBG policy to ensure price stability, the below-target inflation rate, solid indicators of capital and liquidity buffers in the financial sector, and high asset quality. The conversation touched on the high rates of economic growth and its determining factors.“We are pleased that, overall, the IMF mission positively evaluated the policy and steps taken by the National Bank,” Natia Turnava said following the meeting.

1717504323

Deputy Economy Minister says Georgian economy grew 11.8% in April

He also said the figure was “diversified”, with “significant” contribution from the manufacturing, construction, transport, warehousing and knowledge-based service sectors.“Positive economic growth trends continue, with double-digit growth of 11.8 percent recorded in April and an average of nine percent over four months”, he said.The Deputy Minister also highlighted an increase in investment activity and a “significant” contribution from service exports, particularly tourism, which exceeded $800 million in the first quarter.He also noted international financial institutions and rating companies had assessed Georgia’s economy as “stable” due to the Government's “reasonable” macroeconomic policies.“According to the April forecasts of the International Monetary Fund, between 2024 and 2029 Georgia is projected to have the highest economic growth among neighbouring, regional, European Union candidate and European countries”, Tsintsadze said.The Asian Development Bank in April forecast the Georgian economy to grow by five percent this year, adding growth was expected to accelerate to 5.5 percent in 2025, boosted by “continued gains” in tourism and investment.

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