On 26 September, the World Economic Forum published The Global Competitiveness Report 2017–2018. The full report contains detailed profiles and rankings for 137 countries based on 2016 data.
This year, Georgia is ranked in 67th place, which is an eight-position deterioration compared to last year. This is the first drop in the rankings that Georgia has experienced since 2010. To quote the report, “although the overall trend is positive for most Eurasian economies, there is little sign of convergence within the region. Its most competitive economies, including the Russian Federation (38th, up five), are maintaining their edge. This year’s most improved Eurasian economy started from a low base: Moldova moves up 11 places to 89th. Others, that had been catching up in past years are slipping back, with Georgia (67th) and Kazakhstan (57th) losing eight and four places respectively”.
This is disheartening news for Georgian policymakers, particularly given the significant progress that was made in the year before (2016-2017), when Georgia improved its position from 66th to 59th place. This year, it appears that the country has regressed to its 2015-2016 level.
In the meantime, Georgia’s immediate neighbors have managed to improve their standings: Armenia was up six places to 73rd place, Azerbaijan up two to 35th place, and Turkey up two to 55th place.
The Global Competitiveness Index is constructed from 114 sub-indices, which are grouped into 12 pillars. Georgia’s score worsened in eight pillars, showing improvement in only four. The main downward drivers of the index were the first pillar, Institutions, and the third pillar, Macroeconomic environment – both of which are crucial for long-term economic development. The downgrading of the institutions' pillar occurred amid reports of questionable decisions made by Georgian courts and suspicions raised about government pressure on those decisions. Meanwhile, the macroeconomic environment pillar worsened as a result of the increase of the Budget Deficit to GDP and Gross National Savings to GDP ratios. The best and worst-performing areas (compared to last year’s scores) are given in the table below.