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S&P Global Ratings forecasts real GDP growth of 4.5% in Georgia

Finance Materials 15 October 2019 21:05

Baku, Azerbaijan, October 15

By Tamilla Mammadova – Trend:

Georgia's economy grew by nearly 5 percent in real terms in the first half of the year, Trend reports referring to S&P Global Ratings.

"Incorporating a slight slowdown in the second half - lower tourism revenues and muted consumption following the lari's depreciation - we project real GDP growth of 4.5 percent in 2019. We have revised up this estimate from our previous 4 percent for the full year", noted the company.

S&P expects growth to moderate over the forecast horizon for a number of reasons. These include muted growth in Russia and Turkey, the latter emerging from a recession; a slowdown in the EU, where over 20 percent of Georgia's goods exports go; and slower consumption growth stemming from a moderation in credit growth following the authorities' introduction of new macroprudential norms for consumer leverage.

S&P believes that Georgia's economy will continue to grow at a comparatively high 4 percent annually over 2019-2022. Company expects it to grow faster than other countries in the region. Georgia's long established floating exchange rate regime remains particularly important.

Against a weaker external environment, the exchange rate has adjusted promptly, helping avoid any abrupt one-off swings. Among other things, this has preserved the stability of the financial system and allowed Georgia to avoid the credit crunch that hit some other countries in the region in recent years and aggravated other economic problems.

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