By Helena Bedwell

Georgia’s economy can meet the government’s growth forecast of 2 percent next year with as little as $1 billion in foreign investment, according to the International Monetary Fund.

President Mikheil Saakashvili said earlier this month that to achieve 2 percent growth in 2010, Georgia would need “no less than $2 billion in foreign investment.”

The government’s growth target is “very realistic” even if it attracts less investment than planned, Edward Gardner, the IMF’s senior resident representative in Georgia, told reporters in the capital Tbilisi today.

“There will be some export growth this year following a 15 percent decline, interest rates to come down and there will be greater confidence that the financial situation is stable,” Gardner said.

Georgia’s $12.8 billion economy suffered about $1 billion in damage when its U.S.-trained army was routed by Russia in an August 2008 war over the separatist Georgian region of South Ossetia. The country won pledges of $4.55 billion in international aid in the wake of the conflict, including a two-
year $1 billion offer by the U.S.

Foreign investment fell to $92.2 million in the second quarter from $605.4 million in the year-earlier period as Georgia struggled to recover from the war and the global economic slump.

Mideast Investment

“The climate for FDI will remain relatively depressed, so in this regard it is quite natural to think that there are a few pockets of potential investments like in the Middle East, from which growth is going to come,” Gardner said.

Saakashvili has turned to the Middle East for investment to drive the Georgian economy, traveling most recently to Qatar earlier this month.

The IMF said in May that Georgia’s economic performance this year largely depends on donor money. The government forecasts a contraction of 1.5 percent in 2009 and 2 percent growth in 2010.

Georgia’s 2009 foreign investment won’t exceed $1 billion, compared with $2 billion initially forecast by the government, Finance Minister Kakha Baindurashvili said on Oct. 6.

Source: http://www.bloomberg.com