Georgia: Doing business & staying in touch

Georgia has experienced considerable economic difficulties during the last decade and is one of the poorest of the former Soviet republics. Disruption of the centrally organised Soviet trade and supply networks, plus civil war and political instability produced hyper-inflation and a slump in production.

Major structural reforms, centring on the transfer of almost all small-scale enterprises to private ownership and a parallel reduction in the economic role of the state, were instituted. The measures have since contributed to strong annual growth for most of the post-Soviet period (5.5% in 2010) and a manageable rate of inflation. Unemployment, however, remains high, as does widespread poverty.

The agricultural sector, which accounts for about one-third of total output, produces fruit, tobacco, grain and sugar beet; sheep and goats are widely farmed. There is some heavy industry, notably shipbuilding, but most of Georgia's industry is light and engaged in food processing and production of fertiliser. Coal and manganese are mined in commercial quantities.

The government aims to establish the main ports of Poti and Batumi as regional transport and re-export hubs, which will also be able to handle oil refining and transhipment. Part of this plan involved the laying of a set of pipelines running east-west across the entire country, linking the oil and gas fields of central Asia to the Turkish Mediterranean port of Ceyhan.

Further reforms, including the privatisation of major industries such as energy, are planned but the government has so far moved cautiously.

In 1992, Georgia joined the IMF, which has been centrally involved in the economic reform programme, the World Bank and the European Bank for Reconstruction and Development as a 'Country of Operation'. It has also acquired membership of the World Trade Organization.