The recent bouts of sharp lari depreciation caused much anxiety among the Georgian population, prompting fears of inflation, loan defaults, and bank failures, on the one hand, and the typically Georgian political speculations over “who is to blame”, on the other.
In and of itself, a moderate lari depreciation is not necessarily a bad thing for the Georgian economy. It makes Georgia cheaper and more competitive relative to the rest of the world, reducing the current account deficit and carrying a promise of future investment and jobs. That said, a deep an...
ISET Economist Blog
A blog about economics in the South Caucasus.
Mar
04
Feb
06
LEGISLATING GEORGIA’S WAY INTO THE EUROPEAN COMMUNITY – LESSONS FROM RECENT HISTORY
On September 1, 2014, the Georgian society woke up to a very unpleasant reality – after years of extremely welcoming visa regime which put the country on the map as an attractive tourist and foreign direct investment destination, a new migration law regulating foreigners admission and stay in Georgia came into effect. Business owners, foreign students, employees of large and small companies, and even residents of Georgia’s border areas found themselves in a very uncertain...
Jan
23
According to the latest GEOSTAT figures, merchandize exports from Georgia decreased by 1.63% between 2013 and 2014. This is certainly not great news for the country, but does it imply that Georgian goods have become less competitive on the world market? Recent trade data suggest that this is not necessarily the case.
The first thing to note is that much of the decline in exports is related to one particular activity – the re-exports of Georgian cars to Azerbaijan and Armenia. Beginning in 2009, this business has become a “cash cow”, capitalizin...
Dec
08
In the past two weeks Georgians have been waking up with a sense of déjà vu. In a matter of days, the Georgian currency lost over 8% of its value against the US dollar, and reversed the course of appreciation against the euro. The lari winter blues are reminiscent of the last months of 2013, when, after a long period of stability, the lari lost about 5% of its value against the dollar in the course of ten weeks.
The current episode of sudden depreciation sent ripples of worry through the Georgian society and prompted opposition parties to sharply critic...
Nov
25
Over the last weekend I was invited by an international development bank to run a workshop in the nice Hotel Eden in Kvareli, Kakheti. The topic of the workshop was “Georgia’s economic future”.
We started the workshop by discussing the great promise of development economics: “Do the right policy, and you’ll be fine”. Economists like Thorvaldur Gylfason like to show the growth paths of pairs of countries with somewhat similar characteristics, like Mauritius and Madagascar, Singapore and Malaysia, Botswana and Nigeria, and Ireland and Greece. In these pair...
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