Fitch Affirms Georgia at 'BB-Outlook Positive'

Fitch Ratings Inc., one of the "Big Three credit rating agencies," has labeled Georgia at 'BB-'Outlook Positive.

The agency says so far Georgia's economy has been resilient against recent regional volatility.

“However, escalating negative developments in Turkey and the risk of further US sanctions against Russia represent downside risks to Georgia's economic outlook. Russia and Turkey are Georgia's second- and third-largest trading partners, accounting for 14.5% and 7.9% of total exports in 2017, respectively. Both countries are also important sources of remittances, foreign direct investment (FDI), and tourism revenues,” the agency stated.

According to the agency, estimates from national statistics (GeoStat) show the economy to have grown 6.0% in real terms year-on-year, above Fitch's expectations.

“Growth was broad-based; led by domestic demand through a strong pick-up in investment activity and robust export growth. Fitch projects real GDP growth to average 4.8% in 2019-2020, compared with 3.5% across 'BB' category sovereigns. Risks are on the downside due to the less favorable external environment,” Fitch assessment reads.

For 2018 and 2019, Fitch is forecasting Georgia's general government fiscal deficit to average 2.6% of GDP, down from 2.9% of GDP in 2017, and in line with the projected median deficit of 'BB' peers.

“Developments in the banking sector remain stable, with the authorities making gradual progress towards meeting structural benchmarks set out under the IMF's EEF to strengthen the sector's financial stability framework, and regulations on capital and liquidity requirements,” the agency reports.

By Thea Morrison

03 September 2018 16:12