Investment conditions in Georgia: All is well except for distrust in the judicial system
US State Department’s report on Georgia
According to the US State Department’s “Investment Climate in Georgia for 2024″ report, the business and investment conditions in Georgia are favorable. However, there is persistent distrust in the judicial sector’s capabilities, with some business-related legal disputes dragging on for years.
The report also highlights that Georgia consistently ranks highly in international indices for transparency, competitiveness, and economic freedom.
Additionally, it emphasizes that the United States supports Georgia’s sovereignty and territorial integrity within its internationally recognized borders and does not recognize the independence of Abkhazia and South Ossetia.
The report states that Georgia, located at the crossroads of Western Asia and Eastern Europe, has a small but open market that benefits from international trade, tourism, and transportation. As a result of comprehensive economic reforms since 1991, the country has developed a relatively well-functioning and stable market economy.
Georgia’s status as a candidate for European Union membership, granted in December 2023, involves nine steps that the Georgian government must take to continue the accession process, including progress in de-oligarchization and combating corruption.
“Georgia’s compliance with EU legislation will require structural reforms in many areas, including technical regulations and standards, competition law, public procurement, intellectual property rights, and sanitary and phytosanitary measures.
From 2005 to 2023, the average economic growth rate was over five percent. Fiscal and monetary policy has focused on a small deficit, low inflation, and a floating real exchange rate. Despite the dual shock of the Covid pandemic and Russia’s invasion of Ukraine in 2022, Georgia’s economic performance has remained strong,” the report states.
The report further states that after the Covid-19 pandemic, Georgia’s economy rebounded to a 10.4 percent growth rate in 2021 and continued to outperform expectations in 2022 with a 10.2 percent growth. This was driven by tourism revenues, increased immigration and financial flows related to the war, and growth in transit trade through Georgia.
The expansion of the Central Asian market has also led to a recent increase in freight traffic through the Middle Corridor, which connects Europe with Central Asian markets and could become a source of long-term growth for Georgia, especially through investments in strategic infrastructure and regional cooperation.
Overall, business and investment conditions are favorable, and compared to other countries in the region, Georgia is in a better position. However, there is persistent distrust in the judiciary’s ability to handle commercial cases independently, promptly, and competently.
Some companies complain about ineffective decision-making at the municipal level, the lack of effective antitrust policies, political interference, selective law enforcement, and difficulties in resolving property rights disputes.
