Georgia Country Economic Memorandum: Charting Georgia’s Future

Abstract

From the Coronavirus (COVID) pandemic to the war in Ukraine, the world and Georgia are experiencing more uncertainty and accelerating disruption. As a small open economy looking to integrate with the global economy, Georgia must carefully navigate these trends by being prepared for the risks and on the lookout for emerging opportunities. A more capable, competitive and connected Georgia will be better placed to navigate these trends. This Country Economic Memorandum (CEM) aims to inform the policies that could offset these headwinds. To sustain productivity growth, Georgia needs to facilitate its structural transformation and the corresponding spatial adjustment (Chapters 1 and 2). Furthermore, growth will increasingly need to come from improvements in total factor productivity (TFP) in Georgia’s firms (Chapter 3) and advancement in their ability to exploit opportunities in external markets (Chapter 4). Finally, more active and better-skilled labor (Chapter 5) can help offset existing demographic trends and augment productivity. Progress in these areas, supported by higher savings, will make Georgia’s economy more competitive, connected, and capable, help sustain robust GDP growth over the long-term and turn Georgia’s aspirations into reality.