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Bloomberg: Georgia’s Central Bank Chief Sees Lower Rates Starting in 2018

Bloomberg: Georgia’s Central Bank Chief Sees Lower Rates Starting in 2018

Georgia’s central bank probably will keep its benchmark interest rate unchanged through the rest of this year with gradual easing starting in 2018, – Governor Koba Gvenetadze said in an interview with Bloomberg.

Georgia’s Central Bank Chief notes, that the bank increased the rate twice this year already, but they are projecting gradually lowering the policy rate close to neutral, which is around 5 percent.

“The economy is on the recovery path, we are on the way to close the so-called output gap by 2019”, – he said.

The article notes, that Georgia’s 14.3 billion USD economy was crimped by Russia’s longest recession in two decades and the weakening of the Turkish lira aimed political turmoil following the failed 2016 coup attempt. Russia and Turkey are the Caucus nation’s neighbors and its two trading partners.

The governor now expects the economy to expand by 4.5 percent in 2018, aided by a 29 percent gain in goods export thorough eight months of this year, a 28 percent increase in tourism revenue and a 20 percent jump in remittances.

The economy will expand more than 4 percent for this year, as projected Giorgi Gakharia, the minister of Economy and Sustainable Development, said in interview in Tbilisi last week.

Gvenetadze talks about the inflation with Bloomberg, “at the end of 2016, the nation projected inflation this year would be higher than the targeted 4 percent, reflecting an increase of excise taxes and oil prices among the other reasons”. According to him, inflation will remain close to the current 5.7 percent, then slow from January to the 3 percent target.

It should be noted, that Hurricane Irma, which crippled the U.S. refinancing industry on the Texas Gulf Coast, could contribute to the possible inflation increase through higher oil prices.