Georgia Economic Outlook
Available data indicates that growth slowed in Q1 but remained elevated. Annual economic activity growth averaged 7.2% in the quarter, down from a 9.7% GDP expansion in Q4. Weaker activity in the manufacturing and real estate sectors dragged on momentum. Additionally, lower imports growth during the period suggests that domestic demand softened. On the flip side, merchandise exports growth accelerated, which points to resilient external demand. Turning to the current quarter, early data paints a positive picture: inflation eased to 2.7% in April, marking a 28-month low and boding well for household spending. Against this backdrop of softening price pressures, the Central Bank is expected to lower its rates in the coming months, which would provide a boost to domestic activity.
Inflation plummeted to 2.7% in April from March’s 5.3%, marking the lowest reading since December 2020. The decline was driven by a broad-based moderation of prices. Falling inflation should prompt the Central Bank to loosen its restrictive monetary policy stance ahead; it stood pat at its latest meeting on 29 March.