The “AYFB” summarizes economic consequences of the first quarter of 2015

The “Association of Young Financiers and Businessmen – AYFB” publishes a research, reflecting main directions of the economy, foreign factors’ influence on Georgian economy, as well as statistics regarding specific fields of the economy and the analysis for the first quarter of 2015.

The research was represented to the society at the press-club of the information agency “Pirveli by the Vice-president of the organization, ShotaGulbani on May 5. ShotaGulbani talked about the situation of each economic sector for the first quarter of 2015.

The research begins with Banking Sector evaluation.This sector of the economy is functioning successfully, despite the currency problems . In particular, in the first quarter of the current year, the deposits ,attracted by the sector , haveincreased by 30 % and exceeded 13.5 billion GEL. 37 % increase has been recorded in terms of loans. For the first quarter of 2015, the total amount of loans, distributed by commercial banks to the economy has reached 14.7 Billion GEL.

It should be also noted, that high increase tare of both , deposits and debts, was caused by the national currency devaluation. As it is known, the level of dollarization of the deposits and debts, exceeds 60%, thus, their volume, depicted in GEL, has substantially increased.

A pure profit of banks, between January- March of 2015, amounted 101 Million GEL, that is 7 million GEL more ( increased by 7%,) compared with the same data for the same period of the previous year.

The next is Tourism. This is an increasingly important field of economy. It is the sector, providing country with quite a large inflow of the currency. According to the data, provided by the Ministry of Internal Affairs of Georgia, 1 381 000 visitors have entered Georgia in 2015 betweenJanuary-April, which is 2 % less compared with the figure of the same period of the previous year. 35% of visitors are the tourists.

Tourist inflow reduction has started since the end of the last year. However, it should be noted, that the pace of decline has decreased within last months. Namely, 3% reduction of visitors’ number has been recorded in January, 2%- in February and March. As for the April, the number of visitors has neither reduced nor increased.

There are several versions explaining tourist inflow reduction. Most frequently, the new, relatively strict visa regulations are blamed. However, the analysis and he facts reveal, that it has minimum impact.

According to the Georgian National Tourism Administration, 96% ( 1 332 188 )of visits in Georgia comes from 15 countries. With 14, out of the mentioned 15 countries, Georgia has visa free regime, and thus, the citizens of these countries have no difficulties to enter the country.

As for the foreign Trade, theexport decrease has recorded since the end of the summer of the previous year. However, the difference between an export decrease in the last year and the same of the first quarter of the current year is, that in the last year, the export decreased due to the re-export reduction, while in the current year, difficult economic situation in theCommonwealth of the Independent States (CIS), which holds a large part of the Georgian export market, is an additional factor as well.

The CIS market fail and signing the Free Trade Agreement with EU, has significantly effected main trade trends of the country. Namely, in 2015, export in EU has increased, but it has decreased in CIS countries significantly. If Georgian export in EU amounted 140 million USD in the first quarter of the last year, in 2015, this figure amounts 170 million USD - 21% more. As for the CIS countries, Georgian export has decreased by 55 % in this direction and amounted 175 million USD instead of 318 million USD of the last year.

The economic Growth: 2015 real growth rate of the Gross Domestic Product (GDP) has reached 3,2 % for the first quarter of 2015. The current Government’s economic growth prediction was 5%.

The same rates of the economic growth has been predicted by the International Monetary Fund. However, due to the economic shocks, the prediction had been revised and it has significantly decreased to 2 %. According to the report of the Monetary Fund, economic crisis in Russia will have most negative impact on the economy of Armenia, Belarus and Georgia. As a result , economic fall in Armenia and Belarus and economic growth slowdown in Georgia, are expected.
The consumer price levels, money transfers and GEL exchange rate problems have also been discussed during the presentation.