Georgia’s real GDP growth rate in Q3 reached 4.4% year-on-year, putting the country on the path to achieving 4.7% annual growth in 2017. Export, tourism and money transfer trends were behind the strong showing in Quarter 3.
Supply side pressures will keep inflation above the 4% target in 2017.
The Georgian lari (GEL) depreciated against the trade partner currencies both relative to the previous quarter and relative to Q3 of the last year.
Exports rose overall by 25.5% year-on-year in Q3, which was chiefly due to an increase of external demand for traditional Georgian exports, namely ferro-alloys, car re-exports, and wine. The latter increased by 61.2% year-on-year.
Hazelnuts, one of country’s top exports, declined by nearly 56% compared to last year due to harvest damage caused by brown marmorated stink bugs in Western Georgia Exports to CIS countries are becoming prominent once again, driven by the increase of exports to Russia, Azerbaijan and Armenia.
Improvement in credit activity was one of the main drivers of economic growth in the third quarter of 2017. Retail loans increased by nearly 25% % YoY, while business loans showed a 9.5% increase.
In Q3 2017, the volume of remittances in Georgia grew by nearly 20% compared to last year’s level. All primary source countries (Russia, the U.S., Italy, Greece, and Israel) showed a positive annual change. Remittances from abroad constituted 3.2% of total monthly average income in Georgia; however, for recipient families, this share accounted for 42%.
Tourism was yet another significant factor accelerating economic growth in Georgia in Q3. In the reported period, Georgia hosted 2.827 million international arrivals, a 26% year-on-year increase.