After the dissolution of the USSR, Georgia ended up among the former Soviet countries facing the deepest crises, the experts of the Analytical Center state in their July bulletin on modern global economic trends. However, the reforms of the early 21st century along with the foreign financial aid helped to achieve positive rates of economic growth.
According to the researchers, in the two years following the fall of the USSR, Georgian GDP dropped more than twice and still has not reached the level of 1990. Such significant decline was caused by the breakdown of economic ties, the reduction of tourist flow, the lack of national resources. Political instability, civil unrest and armed conflicts also had a negative impact on the economy, the experts note.
From 1999 to 2003, the economic reforms, the first ones in the contemporary history of the country, were carried out in Georgia and aimed to provide sustainable economic growth, development of private sector, market liberalization and increasing investment attractiveness as well as to fight corruption and crime.
The World Bank recognised these reforms as the most successful ones on the former Soviet territory, the experts write. Nevertheless, they produced negative results. For example, lots of medical centres in Georgia were bought up, the minimal wage was abolished, dismissal of employers was simplified, mandatory overtime fees were cancelled.
The Georgian economy is also marked by dramatic demographic and social problems: population decline and ageing, negative migration balance, high levels of poverty and unemployment. The bulletin authors note that due to high levels of labour migration the private international remittances play an important role in the economy of the country. Russia holds the leading position in terms of the remittances volume to Georgia, with 30% of all remittances in 2018.
Due to the tourism infrastructure created during the period of the economic reforms of the early century, tourism became one of the most advancing economic sectors over the past decade. So, the added value of travel agencies increased almost by 7 times in 2007-2018. In 2018 Russia ranked first with respect to the number of tourists travelling to Georgia. However, the experts assume that tourist flow from our country will decrease in the future because of the air travel ban.
For more details, see the Bulletin "Georgia: Features of Economic Growth".
For other bulletins on the current trends in the global economy, see Publications.