Georgian Economics is Showing Recovery Signs, but Recovery Rates Remain Unclear, says NBG

The Georgia economics is showing recovery signs, but the recovery signs remain unclear like all other countries in the world, the Committee of the National Bank of Georgia (NBG) for Monetary Policy concluded at the January 20 meeting.

GDP fall rate for 2009 will drop under 4 percent, while GDP growth will rise by over 2 percent in 2010, the Committee says.

“The annual inflation rate made up 3 percent at the end of 2009, while the average annual inflation rate equals 1.7 percent. The annual inflation rate will stand at around 6 percent in 2010. The real effective rate was fragile and it devaluated by 3.6 percent in 2009. The Georgian bank sector shows the short-term liquidity of GEL resources, but the sector also faces the long-term deficit of the national currency resources. Prices are rising on consumer products on the gourd of exogenous factors. At the same time, the demand has decreased for seasonal factors and the GEL liquidity has increased for a certain while, which has been balanced by government operations”, an NBG press release reads.

The monetary policy influence on the short-term market has been weakened. NBG plans to activate monetary policy instruments to bring transmission mechanisms into action.

Based on all the above NBG has maintained the monetary policy rate at 5 percent.

The NBG Committee for Monetary Policy will hold next meeting on February 17, 2010.