Global credit rating agency Fitch Ratings has affirmed Georgia's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. Pursuant to the updated report, inflation is expected to average 11.5% yoy in 2022, as housing and food prices will remain high, before declining to 6.2% in 2023 and 4.2% in 2024.
"Inflation reached 12.8% yoy in June, well above the central bank's inflation target of 3%, with a large contribution from food prices (6.3pp). The impact of global energy price increases on Georgia is more contained as it primarily obtains natural gas from Azerbaijan on a long-term contract-basis, while lari appreciation has helped prevent higher inflation," reads the report continuing "Fitch expects inflation to average 11.5% yoy in 2022, as housing and food prices will remain high, before declining to 6.2% in 2023 and 4.2% in 2024. Monetary policy will remain tight, though high levels of dollarisation and the predominantly fixed-rate structure of lending mitigates the effectiveness of monetary-policy transmission."
As for economic growth, the agency foresees a strong rebound in growth. "Propelled by a very solid increase in tourism numbers (234.5% yoy in 1H22), stable public consumption, positive net exports and remittances, real GDP growth is forecast 10.9% in 2022. Positive spillover effects on personal consumption, as well as stable export demand and continuing tourism recovery will help keep growth at 5.3% in 2023 and 4.7% in 2024. Some overheating risks are evident in the property sector, with major (sale and rental) price increases."
