S&P Global Ratings: Georgia's economy remains narrow
Baku, Azerbaijan, October 16
By Tamilla Mammadova – Trend:
Georgia's economy remains narrow and is characterized by comparatively low per capita income levels, Trend reports referring to the S&P Global Ratings.
"Nevertheless, we expect the authorities' reform focus should support sustained growth of 4 percent on average annually over the medium term - higher than Georgia's key trading partners", said the company.
Although shortcomings persist, S&P expect Georgia's institutional framework will remain among the strongest in the region.
In the last couple of years, net exports have emerged as a key growth driver for the Georgian economy. In particular, exports to the EU grew by 30 percent since the signing of the Deep and Comprehensive Free Trade Area Agreement between Georgia and the EU in 2016.
Tourism, copper ore, ferro-alloys, wine, and medicines have all shown growth over this period, suggesting some geographical widening of the export basket.
With exports comprising more than half of GDP in 2018, Georgia is now a more open economy compared to 2016. "We project that the share of exports to GDP will stabilize from now on, and domestic demand will be the main growth driver over the forecast horizon", said S&P.
According to S&P, the effect of the Russian sanctions has been relatively limited as they were restricted to direct flights and not extended to other areas (such as Georgian wine); nor were there restrictions on the Georgian workforce in Russia, an important, albeit diminishing, source of remittance inflows. In the meantime, arrivals of Russian tourists by land and flights via other destinations into Georgia continue.