Investment and Growth Strategy
INFLATION Y-O-Y VS. INFLATION TARGET
INFLATION BELOW THE TARGET LEVEL IN APRIL 2023
GEORGIA
CAPITAL
16
12
8
4
0
-4
Apr-16
Headline Inflation
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Core Inflation
- Target
Monetary Policy Rate
Dec-18
Feb-19
Apr-19
Jun-19
Aug-19
Oct-19
Dec-19
Feb-20
Apr-20
Jun-20
Aug-20
Oct-20
Dec-20
Feb-21
Apr-21
Jun-21
Aug-21
Oct-21
Dec-21
Feb-22
Apr-22
Jun-22
Aug-22
Oct-22
Dec-22
Feb-23
Apr-23
11.00
4.7
2.7
NET NBG INTERVENTIONS ON THE FX MARKET AND OFFICIAL RESERVE ASSETS (US$ MN)
USD MN
500
400
300
200
100
(100)
(200)
(300)
(400)
(500)
(600)
I Net Interventions (LHS)
(90) (40)
(30)
(50)(53) (95)
(186)
Reserve Assets (RHS)*
430
265
164
73 100121
93
20
64
34
26
6.0
5.0
5.0
4.0
3.0
(58)
2.0
(232)
(301)
1.0
(461)
0.0
USD BN
SIGNIFICANT DISINFLATION UNDERWAY
Annual inflation decelerated to 2.7% in April 2023, below the 3%
target, decelerating significantly compared to previous months. The
last time inflation was under the target was January 2021. While part
of this disinflation can be attributed to the base effect, prices have
been falling compared to the previous month since February 2023,
averaging a 0.4% m-o-m deflation in Feb-Apr 2023;
As GEL has strengthened and global price pressures have relatively
eased, imported inflation has begun shrinking, driving overall
disinflation. Imported inflation turned negative in March 2023,
amounting to -3.5%;
NBG has maintained a tight monetary stance with the refinancing rate
standing at 11% since March 2022, with its latest forward guidance
indicating that the stance will be eased once disinflationary pressures
become evident in locally-produced goods' inflation as well;
Apart from raising the refinancing rate, NBG has introduced various
macroprudential measures in order to constrain credit activity and,
subsequently, aggregate demand;
NBG bought an additional $461 mn in 1Q23, as international reserves
reached a record-high $5.0 bn at the end of March 2023.
1Q17
2Q17
3Q17
4Q17
1Q18
2Q18
Georgia Capital PLC | Source: NBG, Geostat
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
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