NBG forecasts 3% economic growth in Georgia this year

The National Bank of Georgia (NBG) projects Georgia's economic growth will hit three percent in 2016.

Increased investments, especially in the construction sector, had a positive impact on economic growth and this trend is expected to continue this year,” said NBG.

Following this positive trend coupled with the expected reduction of inflation, the bank’s Monetary Policy Committee (MPC) met today and decided to start to gradually soften the country’s strict monetary policy.

This means that over time the MPC will reduce the country’s refinancing rate, which has been increasing periodically since 2014 when Georgia’s national currency, the Lari, first started depreciating.

For the past two years the MPC increased the refinancing rate in response to increased inflation expectations.

However today the MPC reduced its policy rate by 50 basis points to 7.5 percent.

The changes mean people with a loan taken out in the Lari or in US dollars will experience lower interest rates while paying their loans.

Meanwhile, the Lari continued to gain value against the US dollar after falling dramatically 17 months ago. However, the Georgian has currently slightly depreciated against the Euro.

Today 1 USD equalled 2.2319 GEL. The previous rate was 2.2334 GEL.

As for the Euro, today 1 Euro cost 2.5189 GEL, while the previous rate was 2.5117 GEL.

NBG said it would continue to monitor the developments in the economy and financial markets and would use "all means necessary” and tools at its disposal to ensure the Lari remains stable in Georgia.

The next MPC meeting will be held on June 15, 2016.