Fitch keeps Georgia at BB credit rating with “broadly stable” financial outlook
Fitch says risks to its GDP outlook on Georgia “remain on the downside”, in addition to uncertainty due to the pandemic. The company notes “Georgia is currently experiencing a significant fourth wave of Covid-19 cases, while its vaccination rate remains low.” Photo: Nino Alavidze/Agenda.ge.
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Fitch Ratings, a global financial ratings firm, has affirmed Georgia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) status with a BB rating, also calling the country’s financial developments “broadly stable”.
In an update on February 4, Fitch said Georgia’s rating was underpinned by “a credible and effective policy framework and stronger governance indicators” relative to peers with the BB rating, as placed on a spectrum from AAA to D rating assessments.
The report further notes “long-standing support from official creditors have helped reduced risks to macro stability and supported financing needs” in its evaluation of the country’s financial and credit status.
These credits strengths are balanced by significant exposure of public debt to foreign-currency risk, high financial dollarisation, and external finances that are significantly weaker than the majority of BB category rated peers,” the report reads. It also says “despite the pandemic shock, Georgian banks managed to increase their regulatory capital buffers.”
Fitch forecasts Georgia's economy to expand by 5.5 percent in 2022 and by 5.3 percent in 2023, additionally, projecting the recovery in the tourism sector of Georgia to pick up. It also says that credit growth in the country is “also robust, consistent with the acceleration in GDP.”
In 2021, the estimated real Gross Domestic Product (GDP) in Georgia increased by 10.6 percent compared to the previous year.
However, Fitch says risks to its GDP outlook on Georgia “remain on the downside”, in addition to uncertainty due to the pandemic. The company notes “Georgia is currently experiencing a significant fourth wave of Covid-19 cases, while its vaccination rate remains low.”
Fitch also expects the National Bank of Georgia to maintain a “tight policy stance for 2022,” forecasting average inflation of 7.0 percent in 2022.
Fading out of high base effects should start to bring down inflation from the second quarter of 2022. However, the risk of high inflation expectations becoming entrenched is a vulnerability,” the firm said.
As for fiscal policy, the international credit rating agency projects Georgia's general government fiscal deficit to narrow to 4.4 percent of GDP in 2022, after an estimated 6.1 percent of GDP in 2021.
Georgia's pre-pandemic record of compliance with national fiscal rules should underpin fiscal policy over the medium term, and we expect a strategy of fiscal consolidation to resume once the pandemic shock subsides,” Fitch said.
The report also underscores it doesn’t expect the polarised domestic politics to “infringe on Georgia's credible policy framework and relationship with official creditors.”
Georgian external trade turnover amounted to 14.31 billion USD in 2021, which is an increase of 25.6% year-on-year, express data from the National Statistics Office of Georgia (Geostat) show.
The Consumer Price Index in Georgia increased by 1.1 percent in January 2022 compared to the previous month, while the annual inflation rate stood at 13.9 percent, the latest inflation data of the National Statistics Office of Georgia (Geostat) shows.
The National Bank of Georgia (NBG) has decided to keep the refinancing rate unchanged at 10.5 percent at a meeting of the Monetary Policy Committee (MPC) earlier today. A “particular concern” for increased inflation was named by the bank in its comments, with the Consumer Price Index growing by 0.3 percent in December 2021 and the annual inflation rate amounting to 13.9 percent in the country.
Georgia is ranked top among East European and Central Asian states in good governance, independence of the judiciary, and other metrics in the latest ranking of the Public Integrity Index, a ranking by the European Research Center for Anti-corruption and State-building.
Georgia’s real economic growth in the past year was 2.5 times higher than originally forecast, with government savings in 2022 expected to approach the pre-pandemic mark, finance minister Lasha Khutsishvili told the parliament on Thursday.
The unemployment rate in Georgia has decreased by 1.4 percent in the fourth quarter of 2021 compared to the same period of last year, amounting to 19 percent, the National Statistics Office of Georgia (Geostat) announced.
Georgian experts forecast the inflation rate in Georgia to begin to “decline significantly” from March to April this year, prime minister of the country said on Wednesday, adding a reduction in inflation had already been observed in the final months of 2021.
Commercial banks in Georgia loaned 42.16 billion GEL and received deposits of 36.77 billion GEL in January 2022, the National Bank of Georgia (NBG) says.
Foreign direct investments (FDI) in Georgia totalled $1.152 billion in 2021, which is two times higher compared to the adjusted data of 2020, the National Statistics Office of Georgia (Geostat) reported in its latest data.
The estimated real Gross Domestic Product (GDP) increased by 9.6% in December 2021 year-on-year and by 10.6% in 2021 compared to the previous year, the latest data from the National Statistics Office of Georgia (Geostat) show.
Foreign direct investments in Georgia totalled $351.8 million in the second quarter of 2022, marking a 9.1 percent increase compared to the adjusted data of the same period in 2021, the National Statistics Office of Georgia reported in its latest figures on Thursday.