GDP problems

The Georgian economy is in recession. GDP in the first quarter of 2009 reduced by 5.9 percent. There are income declines in different sectors, in the construction business by almost 24%, in trade by 18%.

The negative tendency of GDP has been evident since last year, however the Cabinet is hoping that the economy will improve in the second half of this year. The Government has proposed a new six-point plan for stimulating the economy, in particular the construction and banking sectors. The project would involve GEL 1 billion and Government officials think that by supporting these two sectors it will become possible to reactivate the economy overall.

World Bank officials think that though countries with small economies managed to resist the fist wave of the crisis the second wave might be more dramatic for them. State expenditure, the social conditions of the population, unemployment and other issues could be affected. The World Bank’s recommendation is to immediately react to all changes in the country’s economy, meaning Governments should be more flexible and ready to act fast. They should introduce corrections in state fiscal policy and envisage future developments.