Interest Rate Cut, Further To Go

We are revising down our end-2011 interest rate forecasts for Georgia from 8.00% to 7.25%, together with our year-end inflation forecasts from 9.7% to 8.0%. While we remain sanguine in our positive outlook for the Georgian economy, a slowdown in inflation and rising global headwinds have led to a pre-emptive rate cutting cycle by the central bank. We forecast the present easing cycle to continue next year with a further 25 basis points cut to 7.00% in 2012, in an attempt to prop up internal demand and counteract the effects of weaker external demand

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