Georgia: Disinflation allows central bank to cut rates
Overview:
The macroeconomic situation has improved significantly in Georgia. The economy is growing robustly, the budget deficit is being reduced and inflation has fallen sharply. The government has implemented its IMF program in full. The central bank is cutting rates. The currency has now been stable for several months having weakened substantially over the preceding two years against the US$ dollar. This is certainly not time for complacency. The current account deficit remains high and is rising once more. Moreover, the global economic picture is worsening. The Lari may yet have to be the adjustment mechanism once again in the face of adverse external shocks. However, Georgia is in much better shape to face the second leg of the global economic crisis than it was the first one in 2008.