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S&P names key risks for Georgian economy in 2021

Business Materials 1 March 2021 14:53 (UTC +04:00)
S&P names key risks for Georgian economy in 2021

BAKU, Azerbaijan, March 1

By Tamilla Mammadova – Trend:

The international rating agency Standard & Poor's (S&P) has confirmed Georgia's sovereign credit rating at BB, changing the outlook from “stable” to “negative,” Trend reports citing the press service of the Georgian Ministry of Finance.

S&P expects Georgia's GDP growth rate to rise to 4 percent in 2021. The ministry indicates that this is one of the highest rates in the region. The ministry also stressed that the expectations of international financial institutions and rating agencies are positive, despite the double-digit decline in the economy at the beginning of the year.

S&P believes that foreign direct investment will play a key role in the recovery of the Georgian economy. As analysts point out, in the post-pandemic period, the country will be less vulnerable to changes in investor sentiment than other sovereign states with a comparable level of development.

Nevertheless, the agency does not exclude that the situation will be affected by the political instability observed in Georgia in recent days.

“This process can jeopardize investor confidence and reduce the volume of investments in the medium term,” the ministry of finance quotes S&P.

Among other positive factors, experts mention a good institutional environment and timely funding from international financial institutions.

S&P's negative outlook is explained by the relatively slow pace of tourism recovery, whose share in Georgia's GDP has steadily increased before the coronavirus pandemic.

“According to S&P, the recovery of tourism around the world, including in Georgia, will be relatively slower than originally expected. In the event of a quick recovery of tourism, which we pin great hopes on, the company expresses its readiness to restore the perspective,” the ministry said.

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