JUNE 2013 - FEAS

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013GEORGIAN STOCK EXCHANGECAPITAL MARKET DEVELOPMENTAND ECONOMIC OUTLOOKMark Griffiths, IMF Mission Chief for Georgiacommenting on 2013 economic outlook forGeorgia noted: “GDP growth could reach 6percent. This forecast is subject to risks. Onthe upside, there is the possibility of increasedtrade with Russia and of new sources of foreigninvestment. However, if the current uncertaintypersists or demand from trading partners falters,then growth could be lower. Strong domesticpolicies and communication are needed toinstill confidence and to reassure markets thatthe new government is committed to prudentmacroeconomic policies and further enhancingGeorgia’s business-friendly environment.“Inflation has remained very low in 2012 dueto the earlier nominal appreciation of the lariagainst currencies of Georgia’s main tradingpartners, and declines in food prices overthe last 12 months. As the impact of thesetemporary factors wears off, the missionprojects that inflation will increase from -0.5percent in November to 4 percent by end-2013, and gradually move toward the mediumterm inflation objective of the National Bank ofGeorgia (NBG). The mission considers that themonetary policy stance, including the recent cutin official interest rates, is broadly appropriateand consistent with the projected rise ininflation.“The draft 2013 budget is socially oriented yetprudent. It increases social spending to protectthe most vulnerable, while continuing with thepath of fiscal consolidation. The fiscal deficit isprojected to decline to 2.8 percent of GDP in2013. This will facilitate external adjustment andcreate room for countercyclical fiscal policy.This is consistent with the medium-term strategyto bring the deficit down to about 1π percentof GDP by 2016 and should keep Georgia’sgovernment’s debt-to-GDP ratio on a firmdownward path.”As for the business climate in the country, thecountry has made remarkable strides overthe last few years—the World Bank’s DoingBusiness Index ranks Georgia as 9th in theworld, first in Eastern Europe and Central Asiaand first among lower middle-income countries.In the program of the Georgian Dream - the2012 parliamentary elections winner coalitionand respectvely in the new Government’splans important place is devoted to furtherimprovement of the investment environmentand implementetion of the pension reform inthe country. This provides grounds for optimismand new momentum for development of theGeorgian capital market.Key Information ContactsNational Bank of Georgia www.nbg.gov.geMinistry of Finance of Georgia www.mof.geGeorgian Central Securities Depository www.gcsd.geGeorgian Corporate Directors Association www.gcda.geCONTACT INFORMATIONContact Name Mr. George Loladze E-mail info@gse.ge Website www.gse.gePAGE 45