Georgian National Bank kept its key policy rate at 4%, a level which has remained unchanged since it was increased by 25 basis points in February.

Annual inflation stood at 2.8% in November. Central bank’s monetary policy committee said on December 17 that no significant inflationary pressures are expected and the annual inflation may only reach the revised target level of 5% in the second half of 2015. Government expects annual inflation to reach 4% by the end of 2015, according to figures in the next year’s state budget.

Central bank’s monetary policy committee also noted that worsening external factors, especially in some of Georgia’s main trading partner countries in the neighborhood, among them in Ukraine and Russia, are affecting negatively on Georgia’s economy.

Official data show only 0.5% y/y increase in exports in the first eleven months of 2014. Exports were on rise on the annual basis till August, when it started to decline. Exports reduced by 34.9% y/y in November, according to preliminary data released by the statistics office on December 16.

Remittances also continued its downward trend in November mostly as a result of declining transfers from Russia, which is Georgia’s main source of remittances.

Money transferred from abroad to Georgia declined by 16.2% y/y in November to USD 104.3 million, according to data released by the central bank on December 12.

Remittances from Russia were down by 30.2% y/y in November to USD 45.8 million after 15% and 7.4% y/y decline in October and September, respectively.

Total remittances in the first eleven months of 2014 stood at USD 1.32 billion, 0.16% increase compared to the same period of last year. Georgia received USD 1.47 billion in remittances last year, accounting for about 9.1% of GDP in 2013.

Georgian National Bank’s monetary policy committee will hold its next meeting in February, 2015.