The state of the Georgian economy

Georgian authorities continue to promote the economic success of Georgia. However this leads many to ask: if the country is economically successful, then why there are so many unemployed, and so many people who have fallen below the poverty line? Independent analysts suggest that not enough time is dedicated to serious discussions pertaining to the economic conditions in the country. Very often authorities make very hasty decisions over some very serious projects and sometimes the money is spent in vain.

Last Tuesday the Georgian Development Research Institute (GDRI) held a conference dedicated to the business environment in Georgia, as well as issues of competition within the economic sphere. There were two major reports and further discussions on the important issues. The first report prepared and delivered by Davit Narmania, focused on the condition of Georgia’s business environment and the concern for its improvements. The second part of the conference was prepared and delivered by Ketevan Lapachi, and was dedicated to the issue of competition policy and economic regulations in Georgia

It appears that independent analysts touched on problems which are of vital importance for the country. Development of small and medium sized businesses is very slow in the country. The statistics show that the number of unemployed doesn’t decrease- at best the number remains the same, sometimes it even increases.

There is a sad situation concerning the import and export balance. The country mainly depends on import and even the traditionally flourishing segment of the Georgian economy has now become import oriented. The sporadic attempts to carry out reforms often go unprepared and without adequate calculation. The bank interest rates on credits are high. The taxation code is changed frequently which make the taxation system unstable and entrepreneurs often receive losses because of a lack of interactive information with the taxation department.

All this and many other issues of course create the situation which hinders the development of business. Moreover, the country is developing monopolies and oligopolies. As the result, the population suffers a great deal. Competition in the economic field is ignored. The existing law on free trade and competition unfortunately doesn’t work properly. There is a threat that the Georgian economy might develop under the principles of clan developments which will definitely have a negative impact on the welfare of the population, as well as the investment climate which might end up moving away from EU integration instead of moving closer to it.

The analysts who attended the conference were almost unanimous in their belief that the economic situation in the country is pretty complicated. Their recommendations were aired, which according to the analysts, should facilitate the development of free competition in Georgia, as well as changes in tax regulations. This should encourage businessmen in developing their activities in the country.