Georgia may increase its gross domestic product (GDP) growth forecast for this year, currently at 4.5 percent, as rising exports and inflows of foreign investment help support the economy, the country’s finance minister told Reuters.
The former Soviet republic, which hosts pipelines carrying Caspian oil and gas to Europe, is recovering from a decline in exports and steep devaluations in the currencies of its main trading partners, including Russia, which have depressed economic growth in recent years.
That recovery is gathering pace, with GDP increasing by 4.8 percent last year compared to the 2.2 percent growth seen in 2016. The economy expanded by 4.9 percent year-on-year in January-February this year.
“I think we may have a scenario when we will revise our own economic growth projection of 4.5 percent upwards,” Finance Minister Mamuka Bakhtadze told Reuters in an interview late on Thursday. “The possibility of such a scenario is pretty high.”
Bakhtadze did not say what the forecast would be revised to, but explained that the main growth drivers would be tourism, construction, transport and logistics, as well as metals and agriculture exports.
He said that the government expected to beat last year’s record $3 billion revenue from the booming tourism sector this year.
Bakhtadze also said the government was considering refinancing its 10-year Eurobonds worth $500 million next year and did not plan new issues this year or in 2019.
“We are now considering ways to refinance our existing Eurobonds issued in 2011 ... we will definitely have the final mechanism of how to refinance and will conduct it in 2019,” he said.
Bakhtadze said he expected the country to attract a similar amount of foreign direct investment (FDI) this year as in 2017, when that indicator hit a record $1.862 billion, or 11 percent of GDP.
“We expect that the FDI figure this year will not deviate from the figure which we have had in 2017,” said Bakhtadze. “In coming years we hope to have the same amount of FDI that we have had in 2017.”
He added that free trade agreements with Europe and China had helped to attract foreign investors, while the amount of reinvestment rose by 130 percent in 2017.
Bakhtadze said he expected total foreign debt at 43 percent of GDP to start declining significantly after 2021, when the country plans to complete a number of major infrastructure projects.
He said the current account deficit was set this year to be similar or lower than the 8.7 percent of GDP reached in 2017, while fiscal deficit was expected to be around 3 percent.