Georgian economy in 2009

Most economic analysts assert that 2009 was quite tough from an economic point of view both domestically and internationally. The consequences of the Russian aggression against Georgia in 2008 and the global financial crisis are cited as the main reasons for this.

In 2009 GDP decreased 4% as there was a serious fall in FDI, which went back to the levels of 2003-2004. There were budget cuts in July and November and the number of unemployed also increased. Georgia has also taken on extra foreign debt as well as internal debt.

2009 was very dramatic for the construction business and companies importing luxury goods. Imports in general have decreased by 30%. The only sector which has more or less resisted the economic crisis is the banking sector, which has seen minimal losses although it has not regained the stability it had before the Russian invasion.

Economic analyst Gia Khukhashvili draws our attention to the paradoxes in the current economic policy. He gives as an example the so-called Economic Freedom Act proposed by the Government. He considers this act as a PR act. Fellow analyst Irakli Lekvinadze also sees this Economic Freedom Act as inherently paradoxical as according to statements made by the country’s leadership we are simultaneously following both the Singapore and European economic models which are mutually exclusive. We are obliged to take the European direction to achieve broader goals but we are taking steps which move us away from that towards the Singapore model. Consequently we cannot see clearly where we are going at all.