18.May .2020 18:57

TBC Capital: FDI decrease is estimated at 500mln USD

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TBC Capital predicts, that FDI decrease is estimated at 500mln USD, out of which 300mln is expected fall in inflows and additional 200mln USD represents lower reinvestment of earning.

• External borrowings by the state (1.6bn) and private sectors (1.5bn) is around 3.1bn USD:

• It is expected that some portion of additional borrowing will be in 2021

• Around 1bn USD will be used to refinance external liabilities

• In case of further deterioration of external inflows, public external funding is expected to increase with higher share absorbed in 2020.

• Taking all these into account, shortfall in external inflows will be sufficiently compensated)

• The import of goods and services are expected to decrease significantly, due to several reasons: 1. lower inflows; 2.Contraction of domestic demand reflecting the state of emergency and deteriorated business and consumer sentiments; 3. Already existing depreciation of the GEL at around current levels, which primarily affects domestic demand through income rather than substitution effect

• Importantly, the Georgian economy is less dependent on “hot money” inflows. In this regard, it is promising that as of March there is no significant reduction in government security holdings by non-residents”, - the report reads.