Inflation rate in Georgia will remain double digit in the beginning of 2022 before decreasing sharply in March, the Renaissance Capital investment bank reports.
Meanwhile, inflation rate in Georgia in December 2021 increased by more than 11% YoY, to 13.9%. Renaissance Capital considers the tightening of monetary policy by the National Bank of Georgia was quite moderate (by only 2.5%, to 10.5%).
Renaissance Capital expects the NBG to maintain a tight monetary policy in 2022 with the potential to start decreasing as inflation slows to 4% until the end of 2022.
“We expect the fiscal consolidation that began in Georgia last year will continue in 2022-2024. We expect the budget deficit at 4% of the GDP in 2022 and 2.5% in 2023-2024. At the same time, public debt, which dropped sharply in 2021 (in relative terms), will remain rather stable at 50-52% of the GDP in 2022-2024,” the report said.
Meanwhile, political uncertainty eased somewhat in 2021 after the local elections, which showed strong support for the ruling party, Georgian Dream. This, together with the recovery of external flows, contributed to the strengthening of the national currency, Georgian lari (by 6.5% in 2021), the bank said.
Renaissance Capital expects the current account deficit to decrease to 8.3% of the GDP in 2022, compared to 9.8% in 2021, with a subsequent drop to 7.3% in 2024.
“In this regard, we see a slight strengthening of the national currency – 3 Georgian lari/1$ in 2022-2024,” the bank said. (Trend/Business World Magazine)
