Delivering Progress – PMCG is an international development company specializing in policy advising, capacity building,
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On November 12, we conducted a Connective Cities Series virtual exchange on Municipal Response to COVID-19, devoted to exploring municipal measures and initiatives taken to address the COVID-19 crisis, as part of the German Agency for International Cooperation (GIZ) project “The Development of COVID-19 Recovery Solutions at Municipal Level in the Areas of Digitalization and Crisis Management in the Southeast European Region.”
PMC Research Center recently started working on new research under the project “Sustainable and Socially Acceptable Labour Migration Management” being implemented by the University of Applied Sciences Bonn-Rhein-Sieg (H-BRS) along with the German Agency for International Cooperation (GIZ) in Georgia, Germany, Kosovo, and Vietnam, and funded by the German Federal Ministry for Economic Cooperation and Development (BMZ).
On November 17, we conducted a program-based budgeting (PBB) training event with the Ministry of Finance of the Kyrgyz Republic under the Multi-Donor Trust Fund funded project entitled “Improving Program-Based Budgeting and Budget Investment Planning, including Improvements in Sectoral Spending Planning.”
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.
The number of international travelers increased by 324.3% in October 2021, compared to the same period of 2020, and declined by 71.8% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 313.7% (2021/2020) and declined by 69.1% (2021/2019), and the number of international tourists increased by 331.5% (2021/2020) and declined by 57.0% (2021/2019).
An observation of the total number of domestic tourism visits in Georgia in 2019 and then throughout the pandemic revealed that since the end of 2020 the numbers surpassed pre-pandemic levels significantly.
The total expenses of domestic visitors in Q2 2021 reached GEL 610 million, which is 70.7% higher than in the corresponding period of 2019, and 128.1% higher compared to Q2 2020.
In Georgia, the average cost of a room in a 3-star hotel was 136 GEL per night in October 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 99 GEL per night.
The average cost of a room in a 5-star hotel in Georgia in October 2021 was 436 GEL per night. In Kakheti, the average price was 615 GEL, followed by Tbilisi - 588 GEL, Adjara – 416 GEL and Guria - 403 GEL.