Georgian business suffered loss as a result of August war

The August war with Russia negatively affected business in Georgia, research conducted by the Association of Young Georgian Economists says. 86% of the 1,000 companies from all over Georgia questioned by the end of October 2008 said they had suffered loss to their businesses as a result of the Georgian-Russian conflict.

The Association of Young Georgian Economists pointed out that research suggests that the tourism business has faced the biggest problems since August: 45% of those questioned from this sector said that their sales dropped by 80%, and some even said the sales stopped completely during and after the August war. According to the research, the war also caused problems for those wishing to expand their business activities. Only 12% of the 281 companies questioned which were planning to expand were able to fulfill their plan, the research says. The rest of the respondents said they were not able to get the additional funding needed or had decided to delay their expansion.

The head of the Association of Young Georgian Economists Board, Ana Katamadze, said the majority of those questioned said they would be able to return to their previous (prewar) volume of sales independently within 3 months. Katamadze said that help from the Government, as well as from international organizations, would help Georgian companies reduce the time needed for rehabilitation of the businesses.

According to the research, 53% of questioned companies think provisional tax privileges is the way to overcome the crisis, while 66% suggest cheap credits can be a solution. 12% say the Government should help companies by helping them find investors. The majority of questioned Georgian businessmen said the most important role in the rehabilitation of the private business sector belongs to the Government, while 30% suggest the private sector should initiate, assist and promote the rehabilitation process.