ISET

ISET Policy Institute researcher Davit Keshelava was invited onto the Business Contact program of Maestro to talk about the newly-published estimate of February’s inflation. According to Geostat, the annual inflation in February stands at 5.5 percent, which is higher than National Bank of Georgia’s targeted inflation. The main product categories that experienced significant price increase were transportation, tobacco and alcoholic beverages, and food and non-alcoholic beverages.
Davit considers that 5.5 percent inflation is not alarming, as it is under the control of the National Bank of Georgia. Furthermore, the NBG is attempting to ensure price stabilization by using available policy instruments, such as an increase of the policy rate that reduces the monetary base of the economy and reduces inflation. However, a negative side effect of this policy is that it also hinders economic growth.

Davit claims that if the NBG is afraid of controlling inflation, they will use all their policy instruments not to let inflation expectations to boost significantly. However, there are positive trends visible in the external sector, with high GDP growth figures in January and the gaining in value of the lari, which further reduces pressure on the Central Bank of Georgia.

Watch the video from Maestro TV to learn more.

ISET Policy Institute researcher Davit Keshelava was invited onto the Business Contact program of Maestro to talk about the newly-published estimate of February’s inflation. According to Geostat, the annual inflation in February stands at 5.5 percent, which is higher than National Bank of Georgia’s targeted inflation. The main product categories that experienced significant price increase were transportation, tobacco and alcoholic beverages, and food and non-alcoholic beverages.
Davit claims that there are two main reasons for such high inflation figures in February. The first is the increase of excise tax on oil, tobacco and motor cars that further increased production costs and reflected on the prices of these products. The second is the increase in global prices of crude oil and food compared to the same month of the previous year, which further increased the prices of imported goods.

Davit considers that 5.5 percent inflation is not alarming, as it is in under control of the National Bank of Georgia. Firstly, this price increase was expected after new initiatives of the Georgian government were introduced which concerned the increase of excise tax on different product categories. In addition, the NBG has already raised the policy rate in January to control inflation expectations. He also claimed that the Georgian Central Bank should be focused on its main goal of ensuring price stability, but also take into consideration the effect of monetary policies on other economic variables.

Watch the video from TV Pirveli to learn more.

ISET Policy Institute Researcher Tamta Maridashvili was interviewed by Maestro TV to discuss the issue of employment in Georgia. Even though the official statistics show that only 12% of the population is unemployed in Georgia, this number does not reflect the Georgian reality. Tamta explained that approximately half of the population is still self-employed in subsistence agriculture, and according to World Bank calculations (2013), the distribution of employment by industry outside of agriculture is dominated by trade, representing 20.3% and composed of jobs that are mostly low value-added. In addition, the public sector - which is also a low-value added sector - accounts for 32% of the country's total employment figure. Thus, the challenge is that most of the employed population does not really create 'value' in the country, resulting in the difficulties to create opportunities for inclusive growth in Georgia.

Watch the video from Maestro TV to learn more.

Natural gas distribution companies requested that the Georgian Energy and Water Regulatory Commission of Georgia (GNERC) recalculate tariffs for the household gas consumption methodology adopted in 2014. The new tariff methodology is similar to the one regulating the electricity market and is based on a cost-cascade method. Natural gas tariffs have not been reviewed since 2005, thus distribution companies have to balance its losses from different economic fluctuations through increasing prices for deregulated sector (i.e. industrial) customers. Levan Pavlenishvili, Senior Researcher at the Energy and Environment Policy Research Center, discussed this issue with Maestro

Watch the video from Maestro TV to learn more.

In January 2017, the monthly inflation rate amounted to 2.9 percent in Georgia. Compared to the same month of the previous year, the Consumer Price Index change (annual inflation rate) posted a 3.9 percent increase. The annual inflation rate was mainly influenced by price changes for the following groups:

Transport: prices in the group increased by 10.8 percent and contributed 1.35 percentage points to annual inflation. The prices were advanced for the subgroup of operation of personal transport equipment (16.0 percent);

Alcoholic beverages and tobacco: prices within the group rose by 18.9 percent, with the relevant contribution of 1.14 percentage points to the overall annual inflation rate. The prices surged by 40.2 percent for tobacco.

ISET researcher Gigla Mikautadze spoke to Palitra News about the reasons behind the inflation growth. He thinks that inflation will not significantly exceeds the targeted 4 % rate, if the NBG together with the Government manages the perceptions of consumers in Georgia.

Watch the video from Palitra News to learn more.

Eric Livny, President of ISET and ISET-PI, discussed the Georgia's recent visa liberalization and the Georgian government’s 10-paragraph economic plan with TV Pirveli.

According to Mr. Livny, the EU's visa liberalization is undoubtedly positive news for Georgian citizens who need or want to travel to Europe, but they should not use this privilege as a chance to illegally emigrate. Mr. Livny also highlighted the importance of economic liberalization, as Georgia has witnessed steady economic growth over the last few years, but employment and income did not follow the trend tightly. In addition, he explained the pros and cons of tax reforms and the motivation behind increased excise tax on “Bads” rather than “Goods”. The rationale of having a tax-related referendum system, the necessity of qualified local tax inspection and changes in the Business Confidence Index (BCI) were also subjects of discussion.

Watch the video from TV Pirveli to learn more.

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