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Mikheil Dundua

Mikheil Dundua Reviews the Year of 2015 in Georgian Economy

Mikheil Dundua an economic expert for the 20/30 civil organization reviews the year of 2015 in Georgian economy. 

The 2015 economic indicators should be considered a real success and maximum available achievement amid the current economic realities in the region, Mikheil Dundua told the CBW.

The outgoing year brought many problems in the region. Economic developments seriously worsened in all our trade partner countries. Strengthened US Dollar seriously affected our relations with our trade partners. Amid these economic challenges, the achieved economic growth indicator should be appraised as a success, compared to reports from our neighboring countries.

As to investment inflows, it is important that this year has recorded one of the good indicators and the country received more than one billion USD investments in the January to September period. FDI of 489 million USD received in 3Q15 is one of the record indicators since 2007. The GEL depreciation was the most negative factor in 2015.

The GEL devaluation has frustrated the internal investment-making processes. The companies that have taken USD denominated loans took considerable expenditures to serve the bank loans. Consequently, their profits declined and internal investment-making process was decelerated. 

At the same time, the National Bank of Georgia (NBG) failed to fulfill its constitutional obligations and we faced the inflation hike because of increased operating expenditures. The annual target inflation rate inclined by 25% (from 5% to 6.3%), while the NBG keeps exclusive leverages for regulating these processes. The NBG has not fulfilled the constitutional obligations and this fact negatively affects the economic growth indicators.

As to the tourism sector, the international tourism revenues have increased, despite the crisis in the region and the national currency volatility. There were fears that the revenues from the international tourism would decline, but we have received opposite results. The sector has brought higher revenues.

For the last 2.5 years, the international tourism business has brought more net profits compared to the 2003-2012 period.  As to the agriculture sector, the report published by the International Fund for Agriculture Development (IFAD) that covers 99 countries promulgates that Georgia ranks third in terms of government efficiency, distribution of financial resources and management. The report also stresses the investment climate was improved in the country and the country is listed in the top three countries in this respect.

Government projects such as Cheap Agro Credit, Produce in Georgia foster creating new job places in regions, efficient distribution of GDP and developing real entrepreneurial fields that should be a fundament for economic growth.

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