Let’s now look at what were some of the main economic trends of the week. Fitch Ratings affirmed Georgia's Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at 'BB' with a Stable Outlook. According to Fitch, the Russian invasion of Ukraine has so far been a large positive economic shock as up to 90,000 Russian, Belarussian and Ukrainian nationals have entered Georgia. This has resulted in remittances surging 65% yoy in 1H22, with remittances from Russia alone more than tripling. Fitch currently views this as a one-off exogenous shock and the lasting impact on the balance of payments and external finances is not yet fully clear.
What Fitch calles a large positive economic shock, Transparency International Georgia calles Georgia’s economic dependence on Russia. According to TI Georgia, such dependence poses a threat to the country. In particular, the data as of June 2022, on trade between Georgia and Russia, tourists, remittances, foreign direct investments from Russia, and registration of Russian companies in Georgia were analyzed by TI Georgia.
In January-June 2022, Georgia received about USD 1.2 billion in income from Russia through remittances, tourism, and commodity exports, which is 2.5 times more than the income received from Russia in January-June 2021 from the same sources. Moreover, this year’s receipts are 36% more than the income received from Russia before Covid-19 - in January-June 2019. This means that compared to previous years, Georgia's economic dependence on Russia has been increasing. This growth is mainly due to the soaring remittances. Exports of goods taken separately decreased, the report reads.
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