After relatively high GDP growth in February and March, the Georgian economy slowed down considerably in April. According to Geostat’s rapid estimates, GDP grew by only 0.9% annually in the reporting month. Consequently, in the first four months of 2015 the Georgian economy expanded by 2.6%. ISET’s GDP forecast for the second quarter of 2015 is 5.1%, which seems to be rather overoptimistic given the grim start of the quarter.

The lari depreciation caused a substantial decrease in USD prices of real estate. Average rental prices of residential property reached their historical minimum in March 2015. Property sellers are trying to compensate for the price decline by offering better, more expensive housing for sale.

On Thursday, May 21st, ISET hosted the Governor of the National Bank of Georgia (NBG), Mr. Giorgi Kadagidze, who delivered a profoundly informative seminar to the ISET community and participants of the ISET Finance Course for Professionals.

The average cost of cooking one standard Imeretian Khachapuri in March 2014 was 3.06 GEL, which is 7% lower month-on-month (m/m, that is compared to the previous month), and 3.1 year-on-year (y/y, that is compared to the same month of last year). For foreign currency earners, Khachapuri became even cheaper due to the depreciation of Georgian currency against USD and Euro.

If we take a more detailed look at the prices of Kh-Index ingredients (see graph), the main contributors to y/y Khachapuri index deflation in March were cheese (-12%) and eggs (-1%). All other ingredients increased in price: flour (11%), yeast (21%), butter (6%), and milk (12%). As can be easily seen, prices fell y/y for locally-produced goods (eggs and cheese, made of fresh milk); prices went up y/y for goods that are imported (yeast and butter) or use imported intermediate inputs in their production (flour and milk).