TBC Capital: Goods Trade Deficit Narrows to 28.7% of GDP

In detail:• The residential segment index decreased by 0.5% compared to the previous month and increased by 7.5% compared to the same month of the previous year;• The non-residential segment index increased by 0.5% compared to the previous month and by 5.9% compared to the same month of the previous year;• The civil segment index decreased by 0.01% compared to the previous month and increased by 1.7% compared to the same month of the previous year.The monthly decrease was mainly due to a 1.6% decline in average monthly nominal wages of employees in the construction sector, which contributed -0.23 percentage points to the total index change.Compared to September 2024, the CCI increased by 4.7%, largely driven by a 19.2% increase in average monthly nominal wages of employees in the construction sector and a 5.3% increase in the cost of machinery, which contributed 4.29 and 0.34 percentage points respectively to the total index change. Overall, the Construction Cost Index has increased by 24.8% compared to February 2022.

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Mariam Kvrivishvili, Georgia’s Minister of Economy and Sustainable Development, highlighted that the agreements cover the renewal of the free trade agreement, the joint development of the “Air Silk Road,” cooperation in agriculture, and collaboration in the field of artificial intelligence.“The updated free trade agreement places special emphasis on boosting Georgian agricultural exports to China and enhances investment opportunities, paving the way for increased Chinese investment in Georgia,” Kvrivishvili said. The aviation MoU with China’s Civil Aviation Administration aims to improve direct flight connectivity, facilitating trade and travel between the countries.Additionally, the Ministry of Agriculture signed an agreement to strengthen exports of Georgian products to China, while the AI-focused MoU with China’s National Development and Reform Commission aims to expand cooperation in emerging technologies. Kvrivishvili noted that these agreements mark a major step forward in reinforcing bilateral economic and people-to-people relations.

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As of October 2025, the overall price level in Georgia increased by 5.2 percent year-on-year. The increase in inflation relative to the 3 percent target was mainly driven by food price inflation, which partly reflected the low base effect from the previous year and the impact of exogenous factors. However, inflation excluding food prices, as well as other measures of relatively sticky prices that better reflect long-term inflation expectations, have remained close to the target level. In particular, core inflation, which excludes from the consumer basket the most volatile components, such as food, energy, and tobacco, remained below the 3 percent target, standing at 2.4 percent in October. At the same time, service sector inflation remained near the target, at 2.5 percent. Meanwhile, prices of imported goods remain low (0 percent), largely reflecting the year-on-year decline in fuel prices. Despite these developments, the prolonged high level of inflation in relatively flexible prices (mainly food) warrants attention regarding potential risks to inflation expectations.According to the NBG's updated central scenario, the inflation forecast for 2025-2026 has been revised slightly upwards, largely due to high food inflation. According to the current central forecast, inflation will average around 4 percent in 2025, and decrease to 3.5 percent in 2026. Other things being equal, elevated food prices are expected to have only a temporary impact on inflation, with their effects gradually fading. The central scenario precisely envisages such a development. In particular, the abovementioned dynamics are temporary in nature and are not expected to create second-round effects, which means that the associated price pressures do not to spill over to the prices of other goods and services.At the same time, economic activity is gradually converging toward its long-term potential, thereby moderating demand-side pressures on prices. According to preliminary data, in January-September 2025 economic growth amounted to 7.7 percent. The normalization of aggregate demand toward its long-run trend is further supported by the maintenance of tight financial conditions, as reflected in prevailing market interest rates.Given the high uncertainty, upside risks to inflation are more pronounced, while downside risks continue to remain. Accordingly, the Monetary Policy Committee considered both high-inflation and low-inflation risk scenarios, along with the central scenario, and the risks operating in different directions were taken into account in the decision-making process.The high-inflation risk scenario that the MPC considered, on the one hand, assumes the realization of global inflationary risks. In particular, the re-escalation of US tariff policies will exacerbate global fragmentation more than expected and may have a negative impact on supply chains. This amplifies the risk of additional price increase for certain types of commodities in international markets. In this scenario, beyond tariff policy, the risk of re-escalation of the geopolitical tensions remains noteworthy as it has a significant impact on international commodity prices. The high-inflation scenario, along with exogenous factors, also takes into account the realization of domestic economic risks. In particular, if inflation remains above the target for a prolonged period, this could exacerbate inflationary expectations. At the same time, if aggregate demand remains above its potential level, demand-side pressures on prices are likely to intensify. The materialization of these risks would necessitate a tightening of the policy rate.On the other hand, the Monetary Policy Committee considered a low-inflation risk scenario, where the realization of the risks would shape the development of fundamental factors in a way that requires a lower trajectory of the monetary policy rate compared to the central scenario. In particular, this scenario, in line with forecasts by international organizations, anticipates a marked decline in oil prices in international commodity markets, reflecting both an increase in supply and a slowdown in global demand. At the same time, the U.S. dollar index (DXY) will remain relatively weak globally for longer than anticipated, contributing to a reduction in headline inflation through lower imported inflation. Additionally, domestic labor market developments are placing downward pressure on prices, which strengthens the possibilities of developing a low-inflation scenario.As a result of macroeconomic analysis and the assessment of the aforementioned scenarios, the Monetary Policy Committee has considered it optimal to maintain a moderately tight monetary policy stance and kept the policy rate unchanged at 8 percent. Upcoming decisions on the monetary policy rate will depend on updated data and the realization of risks. If the impact of one-off factors on inflation is prolonged, the Monetary Policy Committee stands ready to maintain the current tight stance for longer than expected and, if necessary, to tighten it further.The NBG will use all available instruments to maintain price stability. This means keeping the overall price level increase close to the 3 percent target over the medium term.The next meeting of the Monetary Policy Committee will be held on December 17, 2025.

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According to Khutsishvili, this presents a unique opportunity for Georgian companies to forge connections with Chinese counterparts, thereby maximising Georgia’s export potential both within China and across various markets.“Exports are a vital component of our economy. They have consistently been a driving force and a key contributor to economic growth over recent years. This event allows Georgian companies to expand their reach into larger markets, such as China,” he explained.Prime Minister Irakli Kobakhidze, accompanied by a Georgian delegation, is currently on a working visit to the People’s Republic of China.

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Over the first ten months of 2025, the Agency received 1123 applications and handled 3560 calls, representing a 57% increase in applications compared to the same period last year.During the reporting period, the Georgian Competition and Consumer Agency (GCCA) identified 145 violations of consumer group rights in 222 cases. Due to non-compliance with obligations imposed by the GCCA, 68 traders were fined in 111 cases, with total penalties amounting to 117 283GEL. For consumer protection, 132 commitment agreements were signed in 147 cases, where traders committed to modifying their internal business policies and restoring the rights of affected consumers who suffered due to unfair business practices.Of the applications received, 65% were related to online trading, while 35% concerned in-person purchases. According to regions, Tbilisi continues to lead with 79%, followed by Adjara with 5%, Imereti 5%, Kakheti 2%, Kvemo Kartli 2% and other regions.Based on ten-month data, the demand for a refund is 370, the repair or replacement of defective items is 364, 198 for restoring the right to a defective service, ensuring delivery of goods within the stipulated period 74, 36 related to the prohibition of misleading practices, and the rest is 81.According to the statistics, by sector, 73% is the wholesale and retail sector, transport and warehousing 10%, the arts, entertainment, and recreation sector accounted for 5%, and other activities represented 12% of the total.

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Lion Finance Group (BGEO LN) shares closed at GBP 80.05/share (+2.96% w/w and +4.64% m/m). More than 231k shares traded in the range of GBP 76.50 - 80.30/share. Average daily traded volume was 48k in the last 4 weeks. The volume of BGEO shares traded was at 0.52% of its capitalization.TBC Bank Group (TBCG LN) closed the week at GBP 43.55/share (+2.11% w/w and -4.18% m/m). More than 351k shares changed hands in the range of GBP 42.65 - 43.75/share. Average daily traded volume was 82k in the last 4 weeks. The volume of TBCG shares traded was at 0.62% of its capitalization.Georgia Capital (CGEO LN) shares closed at GBP 25.90/share (+2.78% w/w and +7.47% m/m). More than 259k shares traded in the range of GBP 25.10 - 26.70/share. Average daily traded volume was 40k in the last 4 weeks. The volume of CGEO shares traded was at 0.66% of its capitalization. 

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Number of employees in Research and Development increased by 6.4 percent and amounted to 16 191, of which 14 046 were researchers. 55.0 percent of researchers are women and 45% are men. 68.8% of researchers has doctoral or equivalent degree, 28.9% - master’s or equivalent degree and 2.3% - bachelor’s or equivalent.As for the distribution of researchers by age, the highest rate for women falls in the age group of 45-54 years (22.6%), instead of men 65 and higher 25.6%.The largest part of researchers work in social sciences and their total number amounts to 3 491 (24.9%), while the smallest part of researchers work in agricultural and veterinary fields, where about 484 persons (3.4%) are employed.

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The agreement was signed on Monday by Finance Minister Lasha Khutsishvili and ADB Country Director Leslie Bearman Lam. According to the Ministry of Finance, the project aims to ensure that rural water infrastructure meets modern standards and improves access to clean water for local populations.The ministry noted that this marks the first use of ADB’s Results-Based Financing (RBL) mechanism in Georgia , a framework that links disbursements directly to achieved results.The Ministry of Infrastructure will serve as the executive agency for the program, while implementation will be carried out by the Georgian United Water Supply Company LLC.

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