Georgia Capital PLC · LSE:CGEO
Georgia Capital — Q1 2024 Earnings Presentation
18 slides from Georgia Capital's earnings presentation, 2024
Slide 1: Macroeconomic Overview 1Q24 Results
MACROECONOMIC OVERVIEW 1Q24 RESULTS
Slide 2: Strong real GDP growth in 1Q24, with inflation below target
STRONG REAL GDP GROWTH IN 1Q24, WITH INFLATION BELOW TARGET GEORGIA’S ECONOMY CONTINUES TO EXPAND, WITH PRELIMINARY ECONOMIC GROWTH ANNUAL INFLATION BELOW THE 3% TARGET SINCE APRIL 2023, WITH MARCH 2024 AT 7.8% Y-O-Y IN 1Q24 INFLATION AT 0.5% Y-O-Y Headline Inflation Target End of Period Monetary Po
Slide 3: Current account deficit at historically low levels
CURRENT ACCOUNT DEFICIT AT HISTORICALLY LOW LEVELS CAB NARROWED TO -4.3% OF GDP, SUPPORTED BY STRONG GROWTH IN THE SERVICES BALANCE FOREIGN CURRENCY INFLOWS HAVE MODERATED BUT REMAIN ABOVE PRE-WAR LEVELS Export of goods Money Transfers Tourism revenues Total FX Inflows Goods, net Services, net Inves
Slide 4: Strong labor market supporting economic activity
STRONG LABOR MARKET SUPPORTING ECONOMIC ACTIVITY UNEMPLOYMENT RATE AT HISTORICAL LOWS, DOWN TO 16.4% IN 2023 FROM 17.3% IN 2022 LABOR FORCE STRUCTURE Employed Unemployed Labor force Labour force participation rate,% 30 27.2 26.7 25 23.0 21.7 22.1 1,676 1,654 1,655 1,641 20.4 1,604 1,625 1,627 1,629
Slide 5: Appropriate macro policy stance
APPROPRIATE MACRO POLICY STANCE NET NBG INTERVENTIONS ON THE FX MARKET AND OFFICIAL RESERVE ASSETS GENERAL GOVERNMENT DEBT STRUCTURE FAVOURABLE, WITH 3.4% WEIGHTED AVERAGE INTEREST RATE Net Interventions (LHS) Reserve Assets (RHS) 600 6.0 430 400 265 4.8 5.0 164 200 73 100121 93 94 111 20 4.0 50% of
Slide 6: Macroeconomic wrap-up
STRONG GDP PERFORMACE BELOW-TARGET INFLATION ROBUST EXTERNAL BALANCE SHEET MACROECONOMIC GEL/US$ ABOVE PRE-PANDEMIC LEVELS WRAP-UP SOUND MACROECONOMIC FRAMEWORK 6
Slide 7: Sovereign ratings with favourable macro fundamentals
SOVEREIGN RATINGS WITH FAVOURABLE MACRO FUNDAMENTALS Key Ratings Highlights General Facts Rating Agency Rating Outlook Affirmed Ba2 Stable March 2024 BB Stable February 2024 Georgia BB Positive January 2024 Georgia is favorably placed among peers Fitch Rating Country Country Rating Outlook ▪ Area: 6
Slide 8: Georgia's key economic drivers
GEORGIA’S KEY ECONOMIC DRIVERS Top performer compared to peers across a wide range of international rankings Liberal ▪ Liberty Act (effective January 2014) ensures a credible fiscal framework; Fiscal deficit/GDP capped at 3%; Public debt/GDP capped at 60%. economic policy ▪ Following the emergency c
Slide 9: Institutional oriented reforms
INSTITUTIONAL ORIENTED REFORMS OPEN BUDGET INDEX, 2021 | INTERNATIONAL BUDGET PARTNERSHIP ECONOMIC FREEDOM INDEX | 2024 (HERITAGE FOUNDATION) (BUDGET TRANSPARENCY) Ireland 3 Georgia 1 Sweden 3 Lithuania 15 Norway 6 Latvia 20 Italy 10 Czech Republic 24 UK 12 Germany 14 Portugal 29 France 15 Bulgaria
Slide 10: Economic growth continuing at pace
ECONOMIC GROWTH CONTINUING AT PACE GROSS DOMESTIC PRODUCT NOMINAL GDP STRUCTURE, 2023 Nominal GDP, GEL bln (LHS) Real GDP, YoY % 80 24% 80 73 70 20% 61 60 16% 50 50 50 45 10.6% 11.0% 41 12% 35 37 40 32 7.5% 26 28 29 30 8% 20 4% 10 0% 0 -10 -4% -6.3% -20 -8% 2012 2017 2022 2011 2013 2014 2015 2016 20
Slide 11: ICT sector: boosts GDP growth and emerges as new source of FX flows
ICT SECTOR: BOOSTS GDP GROWTH AND EMERGES AS A NEW SOURCE FOR THE FOREIGN CURRENCY FLOWS THE INFORMATION AND COMMUNICATION (ICT) SECTOR SHARE IN GDP EXPORTS OF ICT SERVICES (US$ MLN) STANDING AT 5.9% IN 2023, AS OPPOSED TO 3.2% IN 2018-2021 Information and Communication, Value Added (GEL mln, LHS) T
Slide 12: Inflation below the target level since April 2023
INFLATION BELOW THE TARGET LEVEL SINCE APRIL 2023 INFLATION Y-O-Y VS. INFLATION TARGET INFLATION COMPONENTS Food and non-alcoholic beverages Alcoholic beverages and tobacco Transport 16 Headline Inflation Core Inflation Target Monetary Policy Rate 16 Housing and utilities Other Inflation 14 12 12 10
Slide 13: Current account deficit reached historically low level of 4.3% of GDP in 2023
CURRENT ACCOUNT DEFICIT REACHED A HISTORICALLY LOW LEVEL OF 4.3% OF GDP IN 2023 CURRENT ACCOUNT BALANCE (% OF NOMINAL GDP) EXPORTS AND RE-EXPORTS, US$ BILLION Goods, net Services, net Investment income, net Service exports Goods exports, geo-originated Re-exports 3.3 28% Current transfers, net Curre
Slide 14: Diversified foreign trade
DIVERSIFIED FOREIGN TRADE EXPORTS AND IMPORTS OF GOODS, Y-O-Y % EXTERNAL TRADE BY COUNTRIES, 1Q24, SHARE IN TOTAL 75% Imports, YoY % Exports, YoY % 75% Export 1.3 USD BLN Import 3.4 USD BLN 60% 60% Kyrgyzstan-18% Türkiye-19% 45% 45% Russia-12% Russia-14% Kazakhstan-11% United States-9% 30% 30% Azerb
Slide 15: Tourism revenues back to full strength
TOURISM REVENUES BACK TO FULL STRENGTH, DESPITE LOWER NUMBER OF TRAVELERS COMPARED TO PRE-COVID LEVELS TOURISM REVENUES TO GDP INTERNATIONAL VISITORS BY COUNTRY Tourism revenues, US$ bln Tourism revenues, % of GDP Number of International Visitors in 1Q24, Thousand Recovery level in 1Q24 (% of 1Q19 l
Slide 16: Appropriate monetary policy stance ensuring macroeconomic stability
APPROPRIATE MONETARY POLICY STANCE ENSURING MACROECONOMIC STABILITY MONETARY POLICY RATE INTERNATIONAL RESERVES 14 Official Reserve Assets, US$ mln Net Foreign Assets, US$ mln 6,000 12 International reserves reached US $4.8 bln in 5,000 March 2024 (- 4.5% y-o-y) 10 4,000 8 8.25 3,000 6 4 2,000 2 1,0
Slide 17: USD/GEL above pre-pandemic levels
70 80 90 100 110 120 130 0% 10% 20% 30% 40% 50% -10% Jan-22 Mar-22 Dec-17 Mar-22 Mar-18 Apr-22 Jun-18 May-22 Sep-18 Jun-22 Dec-18 Jul-22 Mar-19 Aug-22 LOANS BY CURRENCIES Jun-19 EXCHANGE RATE INDICES Sep-22 Sep-19 Oct-22 Dec-19 Nov-22 Georgia Capital PLC | Source: NBG, Bloomberg Mar-20 Dec-22 Jun-20
Slide 18: Government balance sheet improving with external public debt hitting lowest level
GOVERNMENT BALANCE SHEET IMPROVING WITH EXTERNAL PUBLIC DEBT (% OF GDP) HITS ITS LOWEST LEVEL SINCE 2015 AND DEFICIT IS IN LINE WITH THE FISCAL RULE GENERAL GOVERNMENT DEBT AT PRE-PANDEMIC LEVELS GENERAL GOVERNMENT DEBT STRUCTURE General Government Debt, External (% of GDP) 60.2% 60% General Governm