November in Review: The recovery in FX credit without excessive risk taking

TBC Research shares monthly review: 

The external sector has weakened, though remains reasonably strong with tourism rebound, improved trade balance and higher remittances in October;

Fiscal to have less expansionary impact;

Business credit growth likely to normalize;

Mortgage growth has slowed further, however, the probability of lighter regulatory framework went up substantially;

Non-mortgage growth is bottoming out gradually;

Household Credit-to-GDP gap at constant exchange rate and Household debt service ratio at current exchange rate both have declined;

When taking FX risk with a GEL income stream, EUR/USD diversification appears to be an optimal solution – probably with a somewhat higher share of EUR for business borrowers;

The GEL remains undervalued, still being a concern for NBG, in our view;

Stronger FX credit and the GEL/USD will counteract negative impact of the tighter policy stance in GEL on the domestic demand;

The growth has slowed in Q3, though temporarily.