S&P Global Ratings: Georgia's economic growth remains relatively high

Business Materials 15 October 2019 12:56 (UTC +04:00)

Baku, Azerbaijan, October 15

By Tamilla Mammadova – Trend:

Georgia has supported and continues to maintain relatively high growth rates over the past few years, even in a challenging external environment, Trend reports via S&P Global Ratings.

The economy expanded by nearly 4 percent on average over 2015-2018, weathering periods of anemic external demand as trading partners were hit by falling oil prices, regional currencies were devalued, and some fell into recession, said the report.

"This resilience partly reflects the economy's success in attracting funds from abroad to finance its investment needs and its external deficits. At 33 percent and 5.7 percent in 2018, Georgia's investment-to-GDP and net foreign direct investments (FDI) to GDP ratios are among the highest of all the 'BB' category sovereigns we rate", the company noted.

While S&P Global Ratings expect the external environment to remain challenging, policymakers' efforts to widen Georgia's economic base, to diversify its export geography and foreign investment, and to develop its infrastructure are likely to keep the pace of economic growth above that of peers while, ultimately, further reducing external imbalances--albeit the process will be only gradual.

The ratings on Georgia continue to be supported by the country's relatively strong institutional arrangements in a regional comparison, and S&P's forecast that net general government debt will remain contained, at close to 43 percent of GDP until year-end 2022.

The ratings are constrained by GDP per capita of $4,300 in 2019, which remains low in a global comparison, as well as by balance-of-payments vulnerabilities, including Georgia's import dependence and sizable external liabilities.