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Can Georgia Return to the Pre‑crisis Rate of Growth?
Ucha Surmanidze
Abstract
RESEARCH OBJECTIVE: The article aims to analyse Georgia’s short ‑term economic prospects and to make well ‑founded conclusions on the Country’s potential to return to the pre ‑crisis rate of growth in the near future.
THE RESEARCH PROBLEM AND METHODS: For evaluat‑ing Georgia’s growth perspective, Country’s essential macroeconomic indicators and statistical data are thoroughly analysed, along with profound study of global economic outlooks and quarterly reports from three prestigious international institutions (IMF, World Bank, EBRD).
THE PROCESS OF ARGUMENTATION: Apart from relevant professional and scholarly literature, current economic trends in Geor‑gia are presented in the paper, revising such important issues like FDI and remittances inflow, foreign trade, currency depreciation, government spending and national debt, so those variables that af‑fect the domestic economy at most. Georgia is small, open economy and because of its high dependency on the external sector, certain significant economic tendencies in main partner countries and in the world in general are also applied in the article.
RESEARCH RESULTS: On the one hand, the decline of capital inflow into the Country, and socially‑oriented government spending on the other, depreciated the national currency gradually and made Georgia’s external liabilities very costly. Neither the depreciation of the currency, nor export subsidies helped the Country’s exports to recover. This is partially conditioned also by economic troubles in main trade and investment partner countries of Georgia.
CONCLUSIONS, INNOVATIONS AND RECOMMENDATIONS: The article intends to enrich the understanding of how small, transition economies operate in uncertain financial environment and what perspectives they have in dealing with external shocks. Current regional and global context, along with obvious drawbacks in Georgia’s fiscal policy make the possibility of regaining pre‑crisis growth rates unrealistic in the near term. The country needs the diversification of export markets and its foreign investment sources, to cut government spending on social programs and bureaucracy, and to direct funds on infrastructural projects.
Keywords
Economic Growth ; Global Economic Prospects ; Georgia
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