In the South Caucasus, the economic growths and inflations were high in 2022. However, both macroeconomic indicators have decreased this year. As of the first five months of 2023, the Caucasus economic growth is 4.8%, where Armenia is outstanding. In the latter, the growth rate remains at double-digit. Instead, inflation in Azerbaijan remains double-digit, while in Georgia and Armenia, it has decreased remarkably. Under these circumstances, the National Bank of the Republic of Azerbaijan (NBA) has narrowed the monetary policy, while in Georgia and Armenia, the policy has begun to ease- the study published by the research institute Gnomon Wise reads.
In the last decade, Caucasus's average annual growth was 2.9%. In the first year of the pandemic, the region's economy shrank by 5.5%. However, the next two years were a fast recovery. In 2021, the growth rate was 7.2%, which climbed to 7.8% in 2022. Last year, Armenia and Georgia were denoted with high growth rates. In Armenia, the economy grew by 14.2%, and in Georgia, 10.1%. Migrants from Russia and, accordingly, financial inflows significantly contributed to these countries' growth. In 2022, Azerbaijan's growth amounted to 4.6%. In May growth rate was extended. According to the first five months, the Caucasus economy has climbed by 4.8%. In April, this was at 4.4%.
During this period, a relatively high growth rate in Armenia. The growth of the latter is 12.5%. In May, Armenia's economy grew by 13.7%. The trade sector, an essential part of Armenia's economy, has remarkably contributed to the growth. In May, compared to the previous year's corresponding trade turnover increased by 28.6%, the construction sector's growth was 18.4%. In January-May, Georgia's average growth amounted to 7.4%. In May, the growth rate was 7.0%. The growth rate declined in the fifth month of this year. Also, trade and construction positively contributed to Georgian economic growth. In the current period, Azerbaijan is portrayed by a low growth rate. In January-May, compared to the same period of the previous year, the economy grew by only 0.7%. However, excluding the oil and gas industry, the other sectors' growth is relatively high at 4.0%. These sectors are 58.2% of the total economy. The unfortunate oil and gas industry situation is associated with a price drop for the latter. As a result, the value-added produced in the oil-gas sector of the economy decreased by 2.5%.
The South Caucasus countries' inflation has been relatively different in the last decade. In 2013-22, the average annual inflation in Azerbaijan was 6.0%, and in Georgia - 4.9%. During this period, inflation was low, at 3.3% in Armenia. In 2022, the increase in the consumer prices index in Armenia was, on average, 8.5%. Azerbaijan and Georgia had 12.2% and 11.9%, respectively.
In the current year, the inflation in the Caucasus countries has decreased. In Armenia, deflation amounted to 0.5% in June, 1.8 percentage points lower than in May. In this period, inflation in Georgia is 0.6%, which is reduced by 0.9 percentage points compared to the previous month. In Azerbaijan, inflation remains doubledigit. The consumer prices index's annual growth rate in June was 10.6%. And in May - 11.5%.
