The head of the International Monetary Fund (IMF) mission, Alejandro Heidenberg, stated that the tense relations between Georgia and the European Union might negatively affect the dynamics of foreign direct investment (FDI).
According to his assessment, this circumstance may weaken investor confidence and affect investment decisions, as stated in the summary of the Fund's mission. The IMF delegation held meetings with the government and the National Bank between December 10-16.
“Over the medium term, economic growth is expected to gradually converge to its potential rate of 5 percent. A key uncertainty surrounding the outlook arises from how the war in Ukraine is resolved, which could reverse some of the gains from migration, financial inflows, and transit trade, but could also create more stability in the region for longer term investment. In addition, Georgia’s strained relations with the EU could weigh on investor sentiment and dampen foreign direct investment. At the same time, the announced USD 6.5 billion real estate project by a United Arab Emirates’ investor, if implemented as planned, presents an upside risk to growth and job creation. In this highly uncertain geopolitical environment, the authorities should maintain fiscal and external buffers and pursue structural reforms that improve governance and generate more jobs", - the statement reads.
