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Book

Economic Update - Georgia, Turkey and Bulgaria: Sensitive to External Shocks

M.: Sberbank CIB, 2014.
Gavrilenkov E., Stroutchenevski A., Konygin S.
Under the general editorship: E. E. Gavrilenkov.

> Georgia. Georgia's $16 bln economy saw strong annual growth in 2010-12 of around 6-7%, but in 2013 growth slowed to 3.2%, which is still good but not enough for an economy with a GDP per capita of around $3,600. Indeed, over the year, Georgia - which depends heavily on capital inflows - failed to utilize its competitive advantage of lower unit labor costs than in other countries in the region, such as Turkey and Bulgaria. > Turkey. The Turkish economy performed well in 1H14 as industrial output rose 3.8% y-o-y (down from 5.3% y-o-y in 5m14). GDP climbed 4.3% y-o-y in 1Q14, and we estimate 2Q14 to show GDP growth just below 4.0%. We expect 3.7% for 2014 as a whole, which is a bit stronger than we expected early in the year. > Bulgaria. Similar to some other smaller economies in the region, Bulgaria benefited from a recovery in the Eurozone that was characterized by ECB President Mario Draghi on August 7 as "moderate and uneven." Bulgarian GDP picked up to around 1.4% y-o-y in 1H14 (1.2% in 1Q14 and 1.6% in 2Q14). Given that Bulgaria's currency is pegged to the euro, the country was unable to extract benefits from this recovery to the same extent as some other countries, such as Turkey, Hungary or Romania, whose monetary policy and exchange rates are more independent. In 2H14, Bulgaria will face additional pressure from potentially slower growth in the EU as policy makers in the West and Russia continue experiments with sanctions.

Economic Update - Georgia, Turkey and Bulgaria: Sensitive to External Shocks