Galt & Taggart says post-election political crisis in Georgia will be short-term, maintains GDP growth forecast

TBILISI. Oct 29 (Interfax) - Galt & Taggart, Georgia's biggest investment bank, believes that political crisis in the country following the parliamentary elections on October 26 will be short-term and will not affect the economy's growth prospects.

"We maintain our growth forecasts for 2024 and 2025 and believe that these political turmoil will be short-lived and will not change the short-term and medium-term growth prospects," the bank said in a review published following the elections.

Galt & Taggart said that following the weekend, yield on Georgia's sovereign Eurobonds shot up 60 basis points to 7.4% per annum, but this was even higher in May-July 2024. It also said the lari exchange rate remained stable after the elections, and the central bank sold $100 million during the pre-election week to prop up the exchange rate.

The investment bank in early October again raised its baseline forecast for Georgia's economic growth this year to 9% from a previously anticipated 8% based on data from the national statistics service for January-August 2024. In June, the bank raised its forecast for GDP growth this year from 6% to 7%, and in early September to 8%.

The bank expects Georgia's GDP growth to slow to 6% in 2025. Inflation could be 1.8% this year and accelerate to 4.2% in 2025. The current account deficit in 2024-2025 will be 5% of GDP.

Georgia held the parliamentary election on October 26. The ruling Georgian Dream party received around 54% of the vote. The elections results are not trustworthy, U.S. Secretary of State Antony Blinken said on Monday. Georgian authorities should "investigate and adjudicate" the violations reported during the election, EU High Representative for Foreign Affairs and Security Policy Josep Borrell and the European Commission said in a joint statement on Sunday evening.

Georgian President Salome Zourabichvili and several opposition parties claimed the elections had been rigged and urged citizens to protest.

Shares in the two largest Georgian banks traded on the London Stock Exchange fell sharply on Monday against this backdrop. According to the exchange, Bank of Georgia Group shares fell by almost 6.8% on Monday, while TBC Bank Group shares fell by 13%. On Tuesday afternoon, the shares picked up slightly, rising 1%-2%.