Fitch Revises Georgia's Outlook to Negative; Affirms at 'BB'

Fitch Ratings has revised the Outlook on Georgia Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the IDR at 'BB'.

The Outlook revision reflects the evolving impact of the COVID-19 pandemic on Georgia. This significant shock will lead to a sharp contraction of Georgia's small and open economy with a high dependence on tourism, deterioration in fiscal accounts including markedly higher public debt and increased risk stemming from Georgia's higher external debt and wider structural current account deficit relative to the median of its 'BB' category peers.

Real GDP growth is forecast to contract by 4.8% in 2020 (a significant downward revision of 9.2pp from our last review in February 2020). Services and industries related to the tourism sector will be hardest hit. The direct contribution from tourism to GDP and employment is around 11.6% and 10.9%, respectively, according to the World Travel Tourism Council. A national lockdown, in place since 21 March, will accentuate the impact on domestic demand.