National Bank of Georgia National Bank of Georgia Giorgi Kadagidze - PowerPoint PPT Presentation

National Bank of Georgia National Bank of Georgia Giorgi Kadagidze Governor Giorgi.Kadagidze@nbg.ge

Georgia At Glance  Area: 69,700 sq km  Population: 4.4 million (2010)  GDP 2010E: US$11.6 billion  GDP per capita 2010E (PPP): US$ 5,057  Average GDP real growth (2000-10): 6%  GDP growth 2010E: 6.5%  Inflation rate 2010 (average): 7.1%  External public debt / GDP 2010: 37.2%  Sovereign ratings: Fitch B+/Stable  S&P B+/Stable/B+  Moody's Ba3/Stable  National Bank of Georgia 2

Growth oriented reforms Economic Freedom Index, 2010 (Heritage Foundation) Ease of Doing Business, 2011 (WB-IFC Doing Business Report) USA 8 UK 4 5 USA UK 11 Up from Norway 8 Estonia 16 112 in 2005 GEORGIA 12 GEORGIA 26 Estonia 17 Latvia 50 Azerbaijan 54 51 Hungary 48 Armenia Romania 63 Bulgaria 51 France 64 Romania 56 Turkey 67 Turkey 65 Italy 74 Kazakhstan 59 75 Bulgaria Montenegro 66 Kazakhstan 82 Belarus 68 Azerbaijan 96 Serbia 89 Russia 143 123 Russia Ukraine 162 Ukraine 145 TI 2010 Global Corruption Barometer: % admitting having paid a TI 2010 Global Corruption Barometer: % of the surveyed claiming bribe within the last 12 month the corruption level has decreased United Kingdom 1% GEORGIA 78% GEORGIA 3% Poland 26% 4% Canada Turkey 26% United States 5% Japan 14% Spain 5% Czech Republic 14% 5% EU+ Austria 9% Georgia ranks 1st in the France 7% Latvia 9% Austria 9% 8% world in terms of the Lithuania 9% Japan France 7% (public perception of the) Italy 13% United States 6% Czech Republic 14% decrease of the level of 5% Italy 15% Poland Canada 4% corruption Latvia 15% United Kingdom 3% Romania 28% Spain 3% 33% Turkey EU+ 3% Lithuania 34% Romania 2% National Bank of Georgia 3

Per capita GDP by PPP 35,000 30,000 29,405 25,000 20,000 18,837 16,998 15,000 14,331 13,392 12,052 11,767 10,000 5,000 5,179 5,057 - 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Per capita GDP by PPP around 5000 USD Per capita GDP by PPP in 2010 National Bank of Georgia 4

Reform Driven Economic Success Nominal GDP (US$bln) Real GDP growth, y-o-y (%) 17 15% GDP 12.3% 11.1% 15 12% 9.6% 13 9% 11 9.4% 6% 9 5.9% 6.5% 6.5% 7 3% 5.5% 4.5-5.5% 5 0% 2.3% 3 -3.8% -3% 1 -1 -6% 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F Components of Nominal GDP (9 months 2010) GDP per capita (PPP) Nominal GDP per capita Manufacturin 6,000 agriculture, 5,324 Others, g & 5,057 4,907 7.2% 4,754 33.7% 5,000 4,680 Construction, 13.8% 4,041 Health care & 4,000 3,644 3,242 Education, US$ 2,966 3,000 10.2% trade 2,921 2,897 services, 2,000 2,591 2,450 2,315 13.5% 1,764 1,000 1,484 1,188 Public Ser. Transport & 919 0 and defense, Communicati 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 11.1% on, 10.5% National Bank of Georgia 5

Balance of Payments 2006 2007 2008 2009 2010f 2011f 2012f 2013f Current Account -1,175 -2,010 -2,912 -1,210 -1,096 -1,349 -1,265 -1,311 Trade Balance -2,019 -2,896 -3,833 -2,399 -2,565 -2,921 -3,008 -3,280 Export of goods 1,667 2,088 2,428 1,894 2,454 2,687 2,772 2,947 Import of goods -3,686 -4,984 -6,261 -4,293 -5,019 -5,608 -5,780 -6,227 Services, net 158 161 21 340 535 678 816 977 Tourism, net 146 208 243 294 471 529 617 703 Factor income, net 162 36 -160 -118 -150 -270 -269 -299 Current transfers, net 524 688 1,060 967 1,085 1,165 1,195 1,291 Capital and Financial Account 1,678 2,422 3,079 1,776 1,323 1,532 1,371 1,197 Capital account 171 128 112 183 201 198 218 222 Foreign direct investment 1,186 1,674 1,494 659 618 741 848 956 Other investments 321 620 1,473 934 504 594 304 19 Public sector -110 -16 890 942 587 282 193 -73 Private sector 432 636 583 -8 -83 312 111 92 Change in Reserves (-decrease) 439 377 131 616 212 184 105 -114 International Reserves 931 1,361 1,480 2,109 2,265 2,449 2,554 2,440 Current Account Deficit (% of GDP) -15.1% -19.8% -22.8% -11.2% -9.4% -10.3% -8.7% -8.0% National Bank of Georgia 6

Balance of Payments 1,500 Current Transfers C&F Account (Remittances) Other investments 1,000 FDI (public sector loans) Increase in Services (tourism) reserves 500 0 -500 -1,000 CA -1,500 PLEDGED DISBURSED COMMITTED $4.5 Billion ~$2.0 Billion ~$4.0 Billio n (may increase to $5.5 billion) -2,000 -2,500 Trade deficit -3,000 National Bank of Georgia 7

Tourism Revenues and Remittances 3,000 2,500 2,000 1,500 1,000 500 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Foreign visitors (thousand persons) Tourism reveneus (mln USD) 1,400 1,200 Remittances 1,000 800 600 400 200 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 National Bank of Georgia 8

Diversified Trade Structure • WTO member since Export Structure* by Country, 2009 Import Structure* by Country, 2009 2000 EU – 21% Netherlands EU – 30% Brazil 1.7% Other 18.8% UAE 1.5% Spain 1.3% 2.3% Other 25.6% UAE 2.5% • Simplified customs Kazakhstan 1.8% Romania 2.6% regime since August 2006 Turkey 19.9% Russia 1.9% Italy 2.9% Germany Bulgaria 3.5% • 2.0% No quantitative Italy 2.1% China 4.0% Turkey 18.0% restrictions on trade United States United States Azerbaijan 3.3% 5.2% 14.7% Bulgaria 7.3% • EU GSP+ Scheme 2006, Russia 6.6% Ukraine 9.6% Ukraine 7.4% export 7,200 categories Germany Canada 10.3% Azerbaijan Armenia 7.8% 6.9% 8.6% of goods duty-free Export Structure* by Product, 2009 Import Structure* by Product, 2009 • Georgia Turkey FTA was Oil seeds Sugars 1.4% Tobacco 1.8% Cement 2.1% Wood 2.0% 2.1% Iron and steel Other 19.4% signed in 2008 Meat 1.4% Furniture 1.9% Pharmaceutic 1.8% Paper and als 2.2% Other 36.5% • paperboard Promising deep & Iron & steel Live animals 2.0% 17.4% Articles of 3.0% comprehensive FTA with iron or steel Cereals 2.7% Fuel 3.9% 2.2% the EU and USA Plastics 3.0% Fertilizers 5.3% Beverages Pharmaceutic Ores 5.9% 10.9% als 4.4% Fuel 17.6% Electrical Vehicles 7.4% machinery & Gems & Machinery & equipment Edible fruit precious appliances Vehicles 7.8% 6.8% and nuts 7.9% stones 10.4% 8.6% National Bank of Georgia 9

Inflation CPI (e-o-p) Core Inflation * 15.0 11.2% 11.0% 12.0% 8.8% 10.0% 10.0 8.0% 6.2% 9.1% 7.6% 5.5% 6.0% 4.6% 5.0 4.4% 3.0% 4.0% 4.9% 2.0% 0.0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Apr-06 Jul-06 Oct-06 Apr-07 Jul-07 Oct-07 Apr-08 Jul-08 Oct-08 Apr-09 Jul-09 Oct-09 Apr-10 Jul-10 Oct-10 0.0% 2005 2006 2007 2008 2009 2010 -2.0% -5.0 -1.9% * 2 standard deviation -4.0% Inflation Share of food in inflation 60.0 Sudan 20% Bangladesh 50.0 Georgia 15% 40.0 Egypt 10% Mauritius 30.0 Turkey 5% Estonia Uganda Poland Mexico 0% 20.0 Japan Hungary Spain Chile Belgium Dec-04 May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Italy France South Africa Greece Luxembourg Switzerland New Zealand -5% Norway Canada Denmark 10.0 UK Germany Netherlands US -10% 0.0 Tradable Non-tradable 0 20,000 40,000 60,000 80,000 100,000 120,000 National Bank of Georgia 10

Fiscal Performance General Government Expenditures Budget Revenue Performance* Expenditures (Capital + Current) Expenditures (Capital + Current) as % of GDP (GEL mln) Total Budget Receipts (LHS) Tax Revenues as % of GDP (RHS) 36.3% 37.2% 10,000 30% 40% 10,000 34.6% 33.7% 24.9% 24.5% 23.6% 24.4% 24.0% 31.2% 29.9% 21.6% 8,000 28.6% 8,000 27.5% 30% 19.2% 25.8% 20% 15.6% 17.1% 6,000 6,000 20.1% 12.0% 16.9% 20% 7,940 7,834 7,635 7,651 7,552 7,456 7,126 7,084 4,000 6,920 6,760 6,670 4,000 6,198 5,719 10% 4,602 3,947 3,386 10% 2,000 2,993 1,606 2,562 1,446 1,977 2,000 - 0% 0% - 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F 2003 2004 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F Current Revenues/Current Expenditures* Conventional Fiscal Deficit (Cash Basis)** Fiscal Deficit as % of GDP - Current Path 160 2005 2006 2007 2008 2009 2010F 2011F 2012F 2013F 140 0% 120 0.0% -2.3% -2% 100 -2.9% 80 -4.3% -2.6% -4% -4.8% -4.0% -3.4% 60 -6.3% -6% -4.8% 40 -7.3% 20 -6.5% -8% 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 -10% -9.2% *Consolidated Budget ** GFS86 Classification National Bank of Georgia 11