S&P rating agency affirmed Georgia’s rating at BB- level as stable. Since the previous forecast, it has not changed.
In its review, S&P notes that in Georgia, significant growth shall be retained and IMF current program will reduce fiscal risks.
Besides, the agency indicates that Georgia’s debt will be retained to 40% GDP and balancing of current account deficit will be done directly through foreign investments.
The agency considers improvement of Georgia’s rating in case if sees significant effectiveness of monetary policy and if lowers high rate of dollarization.
The agency expects average 4% of economic growth in Georgia in 2018-2021.
“In 2017, economic growth in Georgia exceeded our expectations. The biggest contribution to growth was made by export. Trade from Georgia increased in main trade partner countries, as well as in EU. Tourism also contributed to GDP increase. Georgia’s economy is small and it is closely linked to its trade partner countries. Therefore, depreciation of Turkish lira and Russian rubble constitutes a risk for the country. In the mid-term, export will remain an important factor for Georgian economy. Besides, in the long run, of significant positive influence will be the reforms planned by the government, including: development of infrastructure in the country, implementation of capital projects, adoption of new law on PPP projects, deposit insurance, land reform, educational reform and pension reform,” – states the agency.
By S&P’s forecast, GDP volume per capita will slightly increase in Georgia and by 2021 it will be within 4600 USD.
“The agricultural sector, in which major part of population is involved, is still low productive and its contribution to the country’s GDP is quite small.
In 2018, presidential election will be held in Georgia; however, we don’t think that the outcome will significantly influence the country’s direction.
We see certain risks in the fact that the ruling party Georgian dream has the votes of constitutional majority in the parliament. Forces need to centralized,” – notes the agency and adds that the geopolitical situation in the region is still a risk. The report also touches the situation on occupied territories. S&P notes that Russia keeps on strengthening the links with occupied South Ossetia and Abkhazia. However, the agency is not expecting deepening of the conflict at the present stage.
