Georgian economy in 2010

2009 was quite a difficult year for the Georgian economy, as the Russian invasion of August 2008 and the world economic crisis dramatically influenced it. GDP decreased 4% and budget revenues also decreased. The budget was cut twice during the year, in spring and autumn. Foreign direct investment also decreased considerably, to the levels of 2004. Of course such factors will shape the developments of 2010.

International financial organisations think that in the second half of 2010 the world financial crisis will begin easing slowly. Eventually this will affect Georgia’s economy as well. Georgian senior officials have stressed several times that Georgia has managed to survive the crisis in general. However independent analyst Gia Khukhashvili thinks, and he is not alone, that Georgia’s survival in 2009 was much dependent on the financial assistance received from the West, and there are many areas where Georgia is failing to develop. Khukhashvili sees not much improvement in the investment environment, the level of political risk Georgia bears, job creation and so on.

Khukhashvili does not see any global systemic changes which might facilitate the improvement of the economic situation in the country. However economist Davit Narmania thinks that 2010 will not be as bad as 2009. He suggests there will be a slight economic growth in the country but not as significant as in 2007-08. He has called 2010 a 'semi-crisis' year, suggesting that some business sectors, but not all, will start developing.

Official representatives and structures are much more optimistic. However, they should be less enthusiastic as much will depend on political developments inside or outside the country, which could seriously affect its economic development.