Economic crisis is here

An economic crisis is visible in Georgia. In the first quarter of 2009 direct foreign investments of only USD 124 million were made. Many sectors of the economy are in a dire situation. So far the banking sector has resisted but now it also faces difficulties.

The most successful year for the Georgian banking sector was 2007. Several foreign banks entered the market then and investments increased. In 2007 investments of more than USD 136 million were made in the banking sector alone. In 2008 these investments decreased and this tendency has continued in 2009.

Economic analyst Emzar Jgerenaia suggests that Georgia’s financial market bears too much risk and is therefore unattractive. Analyst Davit Narmania suggests that the country’s administration should direct some of the money received from donors into the financial sector, or the banking sector could face very serious problems.