Baku, Azerbaijan, Dec. 20
By Azad Hasanli – Trend:
A depreciation of the Turkish lira may have a moderate effect on Georgia, which could be offset by positive developments in the economies of Azerbaijan and Russia, reads a report by the International Monetary Fund (IMF) on Georgia, Trend reports.
A prolonged lira depreciation could lead to the relocation of Turkish companies operating in Georgia, notably in the textile sector, according to the report.
However, in the near term, the demand for Georgian inputs (raw and intermediate material) by Turkish domestic producers is expected to remain high, given the global value chain effect, according to the IMF.
“Prolonged lira depreciation and high inflation in Turkey would limit remittances from Turkey,” the report said. “In the near and medium term, the lira depreciation would curb the financial capacity and risk appetite of Turkish investors in Georgia, affecting new FDI inflows.”
Since the beginning of the year, the Turkish lira has fallen by almost 30 percent against the US dollar. As of Dec. 20, $1 equals 5.3025 Turkish liras.
Turkey is the largest trading partner of Georgia. At the same time, the country also has a large share in direct investments, tourist flow and remittances to Georgia.
In January-November 2018, trade turnover of Turkey and Georgia amounted to $1.55 billion (13.7 percent of the entire trade of Georgia). Turkey ranks seventh in terms of remittances to Georgia at $7.56 million. In the third quarter of 2018, Turkey ranked fourth ($32.1 million) in terms of direct investments to Georgia.
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