Growth slowed to 6.1% in 2012 from 7.2% in 2011, reflecting uncertainties in an election year that brought in a new government in Georgia. Planned fiscal consolidation and continuing uncertainty in the political and investment climate are expected to limit growth to 5.5% in 2013, but growth should rise to 6.0% in 2014. The current account deficit is expected to narrow as fiscal consolidation reduces imports and as structural reforms gradually raise exports.

Source: ADB estimates.

Economic developments

Another year of strong growth nevertheless saw the rate decrease to 6.1% from the 7.2% of 2011, reflecting uncertainties surrounding the October 2012 parliamentary elections and the subsequent transition to a new government administration. Unemployment remains very high, at 15.1% as of 2011, with two-thirds of the labor force engaged in low-productivity subsistence farming. Youth unemployment, at 35%, is particularly high.

Georgia experienced a peaceful political transition in 2012. The new government has committed to promoting more inclusive growth with additional support for agricultural, rural, and small town development and increased social spending. The government aims to improve trade ties with the Russian Federation. While differences remain, a resumption of these ties should increase Georgia’s exports in agriculture, light manufacturing, and services.

Economic prospects

Growth is forecast to decelerate to 5.5% in 2013 and then increase to 6.0% in 2014, as planned fiscal consolidation and uncertainty in the political and investment climate slow domestic demand, despite anticipated growth in private consumption.

Source: ADB. 2013. Asian Development 2013. Manila.

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