ISET

Georgia’s agri-food export is concentrated in few products and few undemanding markets, making it highly vulnerable to shocks on a small number of commodity and geographical markets. At the same time, the diversity of climatic conditions and ample water resources create significant growth and diversification potential for Georgian agriculture. Georgian conditions appear especially suitable for the production and export of high-value niche products as the land mass is small and fragmented, both due to topographic conditions and present ownership patterns.

This research paper intended to supplement and complement the following economic policy strategies and plans of the Georgian government in the areas of sustainable and balanced growth:

• “Georgia 2020”, a broad agenda directed at long-run growth of most economic sectors with validity beyond the 2020 date

• A “4 point plan” and a broader “14 point plan” of economic reform proposals of the government announced right before and right after the parliamentary elections of 2016.

Our research team conducted a SWOT (strengths, weaknesses, opportunities, threats) analysis of the Georgian economy. We concluded that the broad economic policy priorities Georgia should tackle in the present legislative term. We also made suggestions on policy priorities, first in macroeconomic policy fields and finally for priority sectors in order to achieve more balanced growth.

Economic reforms announced in the run-up to the parliamentary elections in October 2016 raised concerns about whether Georgia was departing from its path of prudent fiscal policy. A reform of the corporate profit tax and increased infrastructure investment were driving expectations of a 6% of GDP budget deficit in 2017, endangering Georgia’s macroeconomic stability and its reputation with investors.

After winning the elections, the “Georgian Dream” coalition has undertaken significant efforts towards keeping the budget deficit at bay. The deficit in 2017 is now expected to remain at around 4% of GDP and to decrease in the coming years. This was achieved by increasing excises on goods such as fuel, cars, tobacco and gas and by further savings in administration expenditures. Immediate worries about Georgia’s economic stability are hence allayed. At the same time it is important to monitor the economic and the fiscal effect of the new fiscal measures in the coming years.

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