The leading economist of the ISET Research Institute, Giorgi Papava, deeply believes that given the current situation, the decline of foreign direct investments (FDI) will continue this year.
In 1Q2024, direct foreign investments of USD 201 million entered Georgia, which was USD 365 million or 64% less compared to the same period of the previous year.
As Giorgi Papava said while assessing the results of the first quarter with BMG, it is conceivable that there was a negative FDI in the financial sector, while this sector was the leader in the past years. According to the economist's assessment, against the background of the current instability and the decline of shares of Georgian banks on the stock market, it is likely that there will be an even more negative result in the financial sector in the second quarter.
As for the expectations related to FDI, Giorgi Papava notes that the open confrontation with the Western partners will soon affect the investments, and therefore, he expects that 2024 will be difficult in the context of investments.
"It is very difficult to expect anything positive in 2Q24. Georgia's investments are not large in volume, and therefore, a specific transaction in a specific period may show us that something important positive is happening or vice versa, but in the big picture, the second, third quarter will be quite a difficult period. The fourth quarter is already the next election period and there is a lot of uncertainty there, so 2024 is going to be a very difficult year in the context of investments. Stability, institutional development, relations with strategic partners are important for the investor. As soon as question marks appear in this direction in the country, it is inconceivable that interest in the country will not decrease", says Giorgi Papava.
