Successfully investing in Georgia

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last updated on 27 May 2020 | reading time approx. 2 minutes

 

 

 

How do you assess the current economic situation in Georgia?

As in previous years the Georgian economy was also in 2019 on the growth path, with a certain slowdown compared to 2018 and 2017. The main reasons for the slowdown are the devaluation of the national currency Lari, tightening of the legal provisions for the granting of loans and building regulations and the lack of tourists from Russia, who are no longer coming to Georgia due to the termination of direct flight connections to Russian cities. Nevertheless, the Georgian economy grew by 4.6 per cent in 2019. Similar forecasts were expected for 2020, which however will be revised downwards significantly due to the outbreak of the corona crisis.

 
Various factors have contributed to the good current economic situation in Georgia. The most important are the creation of good legal, customs and tax conditions by the Georgian government as well as a reasonable fiscal policy.

 

The average wage in 2019 was 1,190.6 Georgian lari (corresponds approx. 342 Euro).

 

How would you describe the investment climate in Georgia? Which sectors offer the largest potential?

Since 2004, Georgia has implemented over 70 reforms, primarily aimed at improving the legal and economic environment for foreign investors. The financial and energy sectors have also been reformed, privatization has been carried out and corruption has been cracked down, which has almost completely eradicated the underground economy. The many reforms in recent years have made Georgia a very attractive country for foreign investors. This is also proven by the World Bank “Doing Business 2020” report, where Georgia took the 7th place out of 190.

 
The following sectors offer the greatest potential for foreigners:

  •  Construction,
  •  Agriculture,
  •  Renewable energy,
  •  Tourism,
  •  General services and
  •  Export of food products.

    

What challenges do German companies face during their business ventures into Georgia?

Foreign investors mostly complain about the country's infrastructure, although a lot has been invested in this area in recent years and many projects have been implemented. But also the bureaucracy complicates the business life very often. All in all one can say, that compared to other countries, German entrepreneurs face less challenges in Georgia, which can be attributed to a good investment climate.

 

Furthermore, it is always a great challenge to remain steadfast against Georgian cuisine and good wine. In plain words: Only a few foreign visitors are able to eat and drink in moderation.

    

How are Georgia's economic relations with Germany?

Germany is one of the most important trading partners for Georgia. In 2019, the German trade with Georgia was 460 million Euro. German exports grew by 12.4 per cent and amounted to almost 400 million Euro. Imports have shrunk by 18.3 per cent compared to 2018. Most of the export goods include automotive parts, machinery, pharmaceuticals and food products.

   

In your opinion, how will Georgia develop?

Due to the worldwide outbreak of the corona pandemic, it is currently not possible to estimate the economic consequences to be expected in Georgia. What is certain is that the Georgian economy will be affected.

 
Nevertheless, Georgia has good chances for further economic development. This is supported by the good geopolitical situation as a transport corridor from Central Asia and Azerbaijan to Europe. Georgia is also independent of energy supply and will certainly remain a good investment location for foreign investors.

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