iTV.ge | Weekly update from TBC Capital Chief Economist

In June, foreign exchange inflows as a percentage of GDP reached a record high. Traditional tourism is booming. In addition, the trade balance has improved and, according to analytical estimates, remittances are also increasing. The impact of immigration seems to be at the same level. Judging from TBC operational data, foreign exchange inflows and overall economic activity were also at a high level in July. For its part, the above-mentioned lari exchange rate reflects the current sentiment assessment and some weakness of the international dollar in the same way as the so-called lari.

Judging from the forecast parameters, it can be said unequivocally that the macroeconomic environment is strong. At the same time, changes in sentiment are naturally important and often difficult to predict. However, it is certain that if there were expectations of a depreciation of the GEL after the election, this should have been reflected in the exchange rate earlier. To illustrate the above again and again, the seasonality of the Lari in recent years will be useful. In particular, while foreign exchange inflows still have seasonality, the seasonality of the exchange rate is not so obvious. Overall, taking into account a variety of factors, we maintain a baseline scenario that is essentially neutral.

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