International rating agency Standard & Poor's raised the forecast for Georgia's economic growth

TBILISI, August 30 - News-Georgia. The international rating agency Standard & Poor's has updated its assessment of Georgia, raising its economic growth forecast to 8%. This is 4 percentage points higher than the previous forecast.

S&P believes that the large number of Russian migrants, as well as the growth of tourism, gives an impetus to domestic demand in Georgia. Thus, S&P considers it possible to keep Georgia's sovereign credit rating unchanged at BB with a "stable" outlook.

Despite this, S&P believes that significant geopolitical risks remain for the Georgian economy, including a slowdown in economic growth in its main trading partners.

The main problem is still Georgia's dependence on imports and a high balance of payments deficit. The organization also believes that the high dollarization of liabilities in the economy also poses a financial risk and limits the flexibility of monetary policy.

S&P claims that Georgia has relatively better governance and institutional arrangements among the countries in the region. The flexibility of the exchange rate, which provides cushioning during a crisis, is also positively assessed.

The country's budget revenues have risen, helping to stabilize the deficit, the organization admits. S&P expects public debt to fall to 44% of GDP by 2025.

Regarding the financial sector, S&P notes that the current regulation in the country complies with international standards, and Georgian banks have adequate capital adequacy ratios.

The S&P review also mentioned high uncertainty due to the influx of migrants. The organization says that although Georgia has received thousands of migrants from Russia, Belarus and Ukraine, it is not known how many of them decide to stay in the country for a long time.

The country's sovereign rating is also affected by political tensions:

“In June 2022, the EU, unlike Moldova and Ukraine, refused to grant Georgia the status of a candidate country, and instead gave it a “European perspective”. Obligations are defined, the fulfillment of which is a prerequisite for a country to obtain the status of a candidate. These commitments cover important areas such as judicial independence, corruption, political polarization and more.