Nika Gilauri, the founder of Reformatics explains that if the political crisis in the country worsens, some of the investors might leave the Georgian market.
He writes about this in a long post published on the social media, part of which refers to the influence of the current political processes on the investment environment.
"A significant decrease in the inflow of investments into the country is expected. Moreover, a certain part of the existing foreign investors might leave our market. The average volume of foreign direct investments in Georgia was approximately USD 1.8 billion in the last three years, and this figure might return to the minimum of the COVID period (0.5 billion) against the background of international isolation.
In addition, it is likely that the price of shares of Georgian companies listed on the stock exchange will continue to fall. Since April of this year, the share price of "Bank of Georgia" has decreased by 17%, "TBC" Bank by 15%, and "Georgia Capital" by 18%. Since the introduction of Russian law, in total, the market value of these companies has decreased by USD 1.4 billion. On the first working day after the elections, the price of these Georgian companies dropped significantly (by 10% on average). It increased during the last week, but in the light of the international isolation of the Georgian government and the statement of the EU ambassador, it is expected to fall again.
This is not a stable environment for an investor. The investor most likely considered the perspective of Georgia's European integration in the price of these companies, and today's reality no longer corresponds to such predictions. Taking into account the above, it is clear that the inflow of investments into the country will significantly decrease and the distrust of foreign companies towards the government of Georgia will increase even more. Also, there is a high probability that we will witness an increase in the outflow of labor force from the country and a decrease in remittances from Georgian immigrants," Nika Gilauri posted.
