• NAME OF RESEARCH

    Georgian Economy - Strong Balance Sheet

  • NAME OF AUTHOR

    Bank of Georgia Research

  • CATEGORY

    Economy

  • YEAR

    2014-02-24

  • Download PDF

Recent months have seen turbulence in Emerging Markets (EMs) resulting in a depreciation of EM currencies and a deterioration of economic outlook. Georgia experienced currency depreciation as well. But analysis in this paper ,shows that contrary to EMs, the problems in Georgia were mainly driven by domestic factors, and timely interventions by the National Bank of Georgia succeeded in smoothing the lari’s fall. As the year-end domestic problems expired, lari regained some of its value and the NBG started to buy foreign exchange through currency auctions.  Slight depreciation of the real lari exchange rate vs. euro and expected EU free trade agreement will support the current upward trend of export to Europe. Finally, a cheaper lari will help the tourism industry as well by attracting European visitors.

The report identifies the main findings of causes and consequences of the lari depreciation.