Fitch Affirms Georgia at ‘BB’
On 12 February 2021, Fitch affirmed Georgia’s sovereign credit rating at ‘BB’. The Outlook is Negative. Based on Fitch, Georgia’s ratings are supported by strong structural indicators, such as governance and business environment, relative to ‘BB’ category peers. A consistent and credible policy framework underpins Georgia’s relative resilience to shocks. The Negative Outlook reflects the significant ongoing impact of the coronavirus pandemic on Georgia’s economy. Fitch forecasts real GDP growth of 4.3% in 2021 and 5.8% in 2022, after a pandemic-driven contraction estimated at 6.1% in 2020. Fitch projects Georgia’s economic recovery at a faster pace than the median growth rates of its ‘BB’ peers (4.0% in 2021 and 3.7% in 2022). The main downside risks to the baseline projections relate to uncertainties attached to the evolution of the pandemic and the efficacy of the vaccination rollout. Based on Fitch, GDP growth will be predominately domestic demand driven, as easing of national restrictions supports private consumption, and higher than historical public infrastructure spending drives investment despite subdued private sector recovery. Net exports of goods should benefit from increased demand from key trading partners. The recovery will remain constrained by the tourism sector: tourism revenues expected at 30% of 2019 levels in 2021, rising to 80% in 2022.
International arrivals down 93.6% y/y in January 2021
Total international arrivals (tourists and same-day arrivals) to Georgia were down 93.6% y/y to 33.8k persons, according to GNTA, as COVID-19 pandemic weighs on international travel. Meanwhile, tourism revenues stood at US$ 14mn (-92.8% y/y) in January 2021, by our estimates.
