ISET

On May 13, 2016 ISET hosted the head of the IMF in Georgia, Azim Sadikov, who delivered a lecture for participants of ISET’s Finance Course for Professionals. The subject of his lecture was “Macro-economic challenges in Georgia and the strengths and weaknesses of its emerging capital markets”.

During his presentation, Mr. Sadikov discussed existing macroeconomic challenges for Georgia. He emphasized the current account deficit as the most important problem for the Georgian economy, which resulted in one of the highest net foreign liabilities to GDP ratio (136%) in Central and Western Asia. In order to finance this deficit, Georgia borrows from abroad, increasing the NFL of the country. The good news, however, is that this NFL is made up of FDI, which is considered to be a very stable source of funding. Mr. Sadikov then highlighted the importance of FDI in productive labor-intensive sectors, which will ensure production growth and accumulation of incomes from these investments in Georgia.

On May 6, ISET hosted Shang-Jin Wei, Chief Economist at the Asian Development Bank. He gave a presentation entitled 'Asian Development Outlook 2016 – Asia’s Potential Growth'.

According to the key messages of the presentation, development growth in Asia softens to 5.7% in 2016 and 2017 from last year. Furthermore, while CPI (Consumer Price Index) inflation subdued, many economies face harmful PPI (Producer Price Index) deflation. In addition, reforms to raise labor productivity can invigorate developing Asia’s potential growth.

Given the data of the outlook, Asia still accounts for 60% of global growth in PPP (Purchasing Power Parity) terms, or 40% in market exchange rate terms. Moreover, slow recovery in global commodity prices will keep CPI (Consumer Price Index) at a low level in Asia.

On Monday, March 21st, European Commissioner for Trade, Cecilia Malmström visited ISET for a discussion of EU-Georgian economic relations, with an emphasis on DCFTA (Deep and Comprehensive Free Trade Area). She was accompanied by Janos Herman, Ambassador of the European Union to Georgia, and Natalie Sabanadze, Georgia’s Ambassador to the EU.

In her address, Ms. Malmström explained the benefits of open markets and improved regulations for Georgian consumers. According to her, economic openness brings two types of benefits. On the one hand, it implies greater competition and a broader variety of products available in the domestic market; on the other, it also brings opportunities to increase exports. For these opportunities to materialize, Georgia would have to create a stable and business-friendly environment that would attract potential investors, foreign and domestic.

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