World Bank launches Country Economic Memorandum for a "competitive, connected and capable" Georgia
The World Bank document highlights that “being a small economy, Georgian firms need to become more export-oriented and better connected”. Photo: Nino Alavidze/Agenda.ge
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Georgia’s "sound economic management" and "good business environment" will continue to support economic activity, but further reforms will be required to keep the gross domestic product growth between 4-4.5 percent, according to the World Bank’s Country Economic Memorandum for Georgia, released on Tuesday.
The report reflects Georgia’s “significant development gains” over the past decade, while aiming to inform Government policies and “help facilitate similar successes” over the next 10 years.
The Country Economic Memorandum recommends that Georgia could maximise its growth potential by:
- Facilitating the ongoing structural and spatial transformations
- Improving productivity performance at the sector- and firm-level
- Increasing connectivity and external trade
- Building up and better utilising human resources
Photo: World Bank
Sebastian Molineus, the World Bank Regional Director for the South Caucasus, said Georgia had overseen a “successful economic expansion this last decade”, but suggested the country continue reforming its economy to help ensure “another successful decade”.
A more capable, competitive, and connected Georgia will be better placed to navigate the global trends of falling growth potential, rising debt, strains in global value chains, disruptive technologies, and climate change – all of which stand to either pose risks to growth or, if managed proactively, offer potential opportunities”, he said.
Sebastian Molineus. Photo: World Bank
Georgian Economy Minister Levan Davitashvili said over the recent years Georgia had made "significant progress" in macroeconomic stability, economic resilience, private sector competitiveness, structural improvement of the economy and the development of respective regulatory frameworks.
We are committed to building on this success and strengthening efforts to support productivity enhancement reforms, connectivity improvement, increasing Georgia’s integration in global value chains, human capital development and unlocking new opportunities for digitalisation and innovation", Davitashvili pointed out.
Levan Davitashvili. Photo: World Bank
The World Bank document also raises economy-wide constraints that may be affecting productivity, including access to finance, informality, competition, as well as firm capabilities such as managerial skills and innovation. The CEM highlights that “being a small economy, Georgian firms need to become more export-oriented and better connected”.
The report recommends for savings to increase to restore stronger investment rates without raising debt sustainability issues.
This could be done by continued prudent macroeconomic policies, strengthening the corporate governance and performance of state-owned enterprises, and by improving financial literacy of households, especially in terms of long-term decisions regarding education and health", it notes.
Finally, the CEM addresses Georgia’s skills and labour market challenges, pointing to a mismatch between jobs created and the education profile of the labour force, a skills gap stemming from weaker teaching practices and limited links with employers, and underdeveloped labour market institutions that limit information access and employment services.
The Georgian economy is projected to grow 5.5% in 2022 and 5% in 2023, the January edition of the World Bank’s report Global Economic Prospects 2022 says.
The Georgian economy grew by 10 percent in the first 10 months of 2022 with the real gross domestic product growth showing an 8.3 percent increase over the previous year, the latest data from the national statistics office shows.
Georgian prime minister Irakli Garibashvili on Monday highlighted the country’s “double-digit” economic growth for two consecutive years, stressing the outcome was the result of the “sound economic policy” of his government.
Georgian economy minister Levan Davitashvili on Monday said the forecast of the International Monetary Fund projected the Georgian economy’s 2022 growth to be 10.5 percent, and highlighted the country exhibited “one of the highest” growth rates in the region.
Revaz Javelidze, the Head of the Georgian Government Administration on Tuesday opened the 4th session of the inter-agency council for the Sustainable Development Goals, discussing the progress achieved in the implementation of the goals in human capital and social welfare, as well as economic development, good governance and environmental protection.
The gross domestic product of Georgia will reach ₾80 billion ($30.08 bln) next year, Prime Minister Irakli Garibashvili said at the Government meeting on Monday, adding the figure had increased by almost ₾30 billion ($11.28 bln) over in the last two to three years.
The World Bank’s Board of Executive Directors approved two new projects for Georgia to contribute to a “greener and more resilient” development of Georgia, the Bank announced on Friday.
Georgian Prime Minister Irakli Garibashvili on Tuesday discussed trade, export markets and his country’s investment potential with Vladimír Dlouhý, the newly appointed President of Eurochambres, the Association of European Chambers of Commerce and Industry.
After four years of operations in Georgia, Sebastian Molineus, the World Bank Regional Director for the South Caucasus, is wrapping up his duties in the country before moving back to the United States to continue working on “an important agenda” for the institution.