Recovering from recession

Last week Georgia was visited by the Southern Europe, Caucasus and Central Asia Regional Director of the EBRD, Olivier Descamps, who assessed Georgia’s current economic condition, identified challenges and worked out possible future prospects. Descamps highlighted that last year Georgia experienced a double shock, the financial crisis plus August war. In the first half of 2009 the volume of foreign direct investment decreased, the banks stopped issuing loans as widely as before and the country’s economy declined and continues to do so.

Descamps highlighted however some positive elements in the current situation. The first is that some macroeconomic stabilisation has been achieved which might attract extra finance. The second is the commitment of donor organisations and their willingness to allot the money promised after the August war. The third is the number of anti crisis moves undertaken by the Government to rescue the situation.

Descamps thinks that worst stage of the crisis is over but it is continuing. One ways to recover from the recession, Descamps suggested, was for the banks to resume issuing loans. If measures are not taken urgently however the country’s dire situation will further deteriorate and will then improve more slowly.