BAKU, Azerbaijan, Feb. 14
By Tamilla Mamedova - Trend:
Georgia's current account deficit (CAD) is estimated to have widened to 12 percent of GDP in 2020 from 5.5 percent of GDP in 2019, Trend reports via the Fitch.
Goods exports fell less than expected, helped by a relatively well diversified base of trading partners, and remittance inflows were surprisingly strong.
However, services exports were significantly affected by the halt to inward tourism.
"We forecast Georgia's CAD to widen to 12.5 percent of GDP in 2021, before narrowing to 7.9 percent in 2022. A domestic driven recovery and a weak outlook for tourism will mean a higher pace of growth in imports than exports," the report said.
Georgia's weaker external finances relative to the 'BB' rated category, are also reflected by its significantly larger net external debt position (73.9 percent of GDP vs the historical 'BB' median of 9.7 percent of GDP), and lower external liquidity ratio (112.6 percent vs the historical 'BB' median of 141.8 percent).
These weaknesses are partially offset by a demonstrated record of strong donor support to meet external financing needs and help preserve external buffers and current external payments (CXP) coverage.
Foreign reserves reached a historical peak of $3.97 billion at end 2020 (4.5 months of CXP cover), boosted by donor financing.
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