Fitch Ratings: "Georgia continues to grow, overcomes external shocks"
Thursday, October 6“Georgia is continuing to enjoy strong governance indicators by regional and rated peer standards despite facing external shocks,” says global rating agency Fitch Ratings.
A flexible exchange rate, strong growth in tourism and recovering remittances are contributing to the adjustment of the external sector to a shock stemming from the collapse in oil prices and its impact on trade with and remittance flows from CIS countries,” said Fitch Ratings
While forecasting Georgia’s growth on a five-year average basis, Fitch Ratings expected growth to strengthen as the external environment improved, and as infrastructure projects supported the construction industry, although the import dependence of these projects will dull their impact on headline growth.
Growth has held up fairly well in the face of the external shock…Fitch forecasts growth of 3.2 percent in 2016, driven by reviving confidence, higher government spending, tourism and the start of work on a gas pipeline project. Corporate tax reform will bolster medium-term growth, but offsetting fiscal measures may dampen output in the near term,” said Fitch.
The global ratings agency forecast Georgia’s Gross Domestic Product (GDP), Foreign Direct Investments (FDIs) and economy would continue to grow in the final few months of this year.
Georgia runs a persistently large current account deficit, forecast at 11.9 percent of GDP in 2016 compared with a peer median of 2.4 percent of GDP, although net FDI inflows are also well in excess of peers,” said Fitch Ratings.
The current account is forecast to narrow throughout the forecast period, as remittances and tourism pick up, but will still be close to 10 percent of GDP by 2018. FDI inflows generally have a heavy import requirement,” it said.
Overall Fitch Ratings affirmed Georgia’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at 'BB-' with Stable Outlooks. (Agenda.ge)