PMC Research Center has launched a new periodic newsletter entitled Macro Overview.  It aims to review the recent trends and developments of the Georgian economy and sets the stage for what is to come in the approaching months.   Macro overview highlights some of the key indicators in Georgian economy such as inflation, economic growth, and employment. It also explores external sector of the economy, overviewing trends in tourism, trade, remittances and FDI. The publication consolidates and includes analytical pieces from the PMC Research Center’s periodic newsletters, such as economic outlook and indicators series, monthly tourism update, black sea bulletin, employment tracker. It also includes insights about the expectations of businesses and economists about the future of the Georgian economy from our Georgian economic climate and bag indexes.

The Employment Tracker is a new periodic publication developed by PMC Research Center, in collaboration with Jobs.ge. The tracker produces valuable insights into the Georgian labor market as it lays out the trajectory of employment and salaries, most demanded job categories, and expectations of specific economic sectors regarding their employment plans. Using real-time data, the insights produced by the tracker can prove crucial to rapid analysis and decision-making process with regards to the labor market. The publication illustrates a 6-month trend of individuals receiving salary and the number of vacancies posted on Jobs.ge. Additionally, in every quarter based on the BAG Index Survey results, the Employment Tracker will provide information on changes in the number of employees of the Business Association Georgia (BAG) member companies and their expectations regarding the changes in employment.    

The number of international travelers increased by 249.2% in December 2021, compared to the same period of 2020, and declined by 73.3% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 226.4% (2021/2020) and declined by 69.9% (2021/2019), and the number of international tourists increased by 239.1% (2021/2020) and declined by 53.7% (2021/2019). At the beginning of 2021, the Hotel Price Index (HPI) was negative compared to both 2020 and 2019, however the monthly prices showed a significant YoY increase from June 2021 onwards and recovered considerably compared to 2019 levels. In 2021, the average monthly prices of hotels exceeded both the pre-pandemic level (by 23.7%) and the 2020 level (by 39.1%). Looking at specific categories, the price increase has been most significant for 5-star hotels (by 12.1% compared to 2019 and by 51.4% compared to 2020), while for 3-star hotels the price increase has been least significant (by 4.8% compared to 2019 and by 20.1% compared to 2020).

In Georgia, the average cost of a room in a 3-star hotel was 135 GEL per night in December 2021, while the average cost of a room in a 4-star hotel in Georgia was 246 GEL per night and the average cost of a room in a guesthouse was 106 GEL per night. The average cost of a room in a 5-star hotel in Georgia in December 2021 was 423 GEL per night. In Kakheti, the average price was 548 GEL, followed by Tbilisi - 524 GEL, Guria – 398 GEL and Adjara - 391 GEL.

Nearly two years since the outbreak of COVID-19, the spread of the virus itself, vaccination rates, and new variants, continue to shape the speed and strength of economic recovery. In the case of Ukraine, geopolitical and domestic political tensions are also important variables to have been hindering economic growth. In this issue, we provide an overview of the ongoing economic recovery in Ukraine and try to supply an economic forecast for the country for 2022, looking at the performance of each economic sector in the process.

International rankings and indicators help us to understand and assess how countries are performing in different areas. In this bulletin, Ukraine’s positions in international rankings and the dynamics therein are reviewed based on recent data. Its positions will also be compared with other Eastern Partnership (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, and Moldova).

The number of international travelers increased by 288.8% in November 2021, compared to the same period of 2020, and declined by 73.0% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 267.2% (2021/2020) and declined by 69.3% (2021/2019), and the number of international tourists increased by 283.2% (2021/2020) and declined by 55.3% (2021/2019). Observing the total number of outbound tourism trips taken by Georgians in 2019 and the pandemic-dominated years since shows that from the beginning of 2021, the demand for international travel among Georgians has demonstrated significant recovery trends, the total number of outbound visits reaching 22.6% of pre-pandemic value in Q3 of 2021, due to vaccination rollout and the easing of entry restrictions in many countries. An evaluation of the common characteristics of Georgian outbound visits shows that the outbound tourism industry is fairly concentrated in terms of the purpose of visit (top 3 purposes amounting 82.4% of total outbound visits) and visited countries (top 4 destinations accounting for 82.9% of total visits), meaning that the alleviation of entry restrictions to such countries positively affects the number of Georgians taking trips abroad.

In Georgia, the average cost of a room in a 3-star hotel was 135 GEL per night in November 2021, while the average cost of a room in a 4-star hotel in Georgia was 226 GEL per night and the average cost of a room in a guesthouse was 101 GEL per night. The average cost of a room in a 5-star hotel in Georgia in November 2021 was 395 GEL per night. In Kakheti, the average price was 555 GEL, followed by Tbilisi - 544 GEL, Guria – 397 GEL and Adjara - 354 GEL.

According to a survey of Georgian economists, the economic climate in the country in the fourth quarter of 2021 has improved compared to the third quarter of the same year, as well as compared to the fourth quarter of 2020. Meanwhile, with respect to the current situation, the Georgian economists’ appraisal was again positive and has improved compared to both: the previous quarter this year and the corresponding quarter of the last year. The economists’ predictions for Georgia’s economic situation for the next six months were also positive. Indeed, their expectations for this period were much higher compared to their predictions in the third quarter of 2021 and the forecasts they made in the fourth quarter of 2020.

The global economic recovery is ongoing, however the COVID-19 pandemic is still causing considerable volatility. Since the beginning of 2021, inflation rates have increased in both advanced and emerging economies, generally driven by pandemic-related supply-demand mismatches and rapidly rising commodity prices, following a global decline in inflation over the course of 2020. According to the latest forecasts, for most countries upward price pressures are expected to subside with a return to pre-pandemic levels by mid-2022. With this in mind, it is pertinent to compare the inflationary trends of Georgia with global patterns. In Georgia, the year-over-year (YoY) Consumer Price Index (CPI), which measures the average price of goods and services acquired by consumers compared to the reference period, has proved relatively similar to global trends, as in December 2020 the inflation rate showed a significant decline of 4.6 percentage points compared to December 2019, reaching 2.4%, major decrease (25.4 pp) in prices coming from “housing, water, electricity, gas and other fuels” category, which can be explained by the introduction of utility subsidies for households from November 2020 and plummeting global oil prices in the middle of 2020.  This figure was still higher than the lowest figure of the reporting period which was recorded in December 2018 (1.5%). Since the beginning of 2021, monthly YoY CPI inflation has been increasing sharply, surpassing pre-pandemic levels, and reaching its peak to date of 12.8% in October 2021 with a 10 pp increase from the beginning of the year. On the contrary, YoY monthly core inflation increased in the middle of 2020, reaching 6.6% in June 2020 (with significant increases in prices of routine household maintenance, healthcare, and restaurants and hotels) and this has continued to be relatively stable with a monthly average value of 5.8% over the 2020-2021 period, while the pre-pandemic (2017-2019) monthly average was equal to 3.1%. The magnitude of the fluctuations was significantly lower in the case of core inflation compared to CPI inflation, which could be explained by the fact that the most significant price variations have tended to come under the food and energy categories.