TAILIEUCHUNG - MONTHLY ECONOMIC INDICATORS

As we have seen, the banks in Georgia are liquid, stable, and poised in their growth to undertake an expansion of their long-term loan portfolio to sectors beyond real estate secured loans. In addition, Georgian banks have extensive branch systems so implementing a long- term credit program would be straightforward. Branch networks are in place, ready pools of customers are present, and the bank operational systems already exist. As demonstrated by the small percentage of loans to the agriculture and industrial sector, banks are risk averse to both sectors. Long-term bank financing although increasing is centered in mortgage. | 0ỶGỈ Monthly Economic Indicators J THEJTREASlRY kíũtuhiilidni k-iiti iii iii RdWii February 2010 Executive Summary Economic activity continues to increase broadly in line with the Half-Year Update although some differences are beginning to emerge across sectors. Employment was less negative than expected and while the unemployment rate lifted sharply we expect employment to begin to increase in coming quarters. The outlook remains for a gradual economic recovery with risks remaining around the conversion of expectations to activity along with continued global uncertainty. The New Zealand economy is continuing to recover though some momentum particularly in the household sector may have been lost over the initial months of 2010. Forward-looking indicators are generally positive especially for the manufacturing and construction sectors and the lower exchange rate in recent months is providing more confidence for exporters. Retail sales rose further in the December quarter reflecting the significant lift in consumer confidence over the second half of 2009 as the economy emerged from recession. Discounting played a key role in increasing volumes as the higher exchange rate helped to lower the price of imported goods. However sales in the December month were weak and initial indicators for January suggest momentum may continue to ease in the short term with both consumer and retailer confidence slipping. Following a strong bounce-back over the middle of 2009 housing activity has also lost momentum in recent months with January data showing a sharp fall in sales. While some of the weakness may reflect some uncertainty about future changes to property taxes it is more likely the initial euphoria resulting from historically low interest rates earlier in 2009 has somewhat faded. However residential construction is expected to contribute strongly over coming quarters as building consents continue to rise and activity expectations remain at historically high levels. .

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