Georgia

In-depth country-focused analysis on Georgia's economic, political and operational risk environment, complemented by detailed sector insight

Georgia

Our comprehensive assessment of Georgia's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Georgia, as well as the latest industry developments that could impact Georgia's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Georgia before your competitors.

Country Risk

Georgia Country Risk

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Core Views

  • Political tensions in the South Caucasus will remain high over the coming years as increased Russian intervention in Georgia's breakaway territories fuels concerns that Russia will attempt to annex Abkhazia and South Ossetia. Meanwhile, Azerbaijani-Armenian relations will remain strained over the conflict surrounding Nagorno-Karabakh.

  • Armenia's economy will continue to struggle during 2016-2017 primarily due to its trade and remittance flow links with ailing Russia. Beyond this we continue to see little means of diversifying its growth model away from one driven by private consumption underpinned by volatile remittance flows.

  • Georgian real GDP growth will slow over the next two years relative to the 5.9% average growth achieved between 2011 and 2015 due to exposure to Russia's economic crisis, which has...

Georgia Operational Risk Coverage (9)

Georgia Operational Risk

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BMI View: Georgia's operating environment is threatened by the country's potential vulnerability to interstate insecurity in the face of Russian-backed unrest. Investors also face risks associated with the lack of quality tertiary education, low levels of ICT and intellectual property rights, and the high costs and low connectivity of trade and transport networks. However, there are also some benefits to investors who choose to enter Georgia, such as the high level of basic skills in the workforce, including basic literacy rates, the minimal red tape in terms of business start-up and closure, and the ease of trading, which reduces transit times for goods and improves import and export markets. Due to these considerations, Georgia has been given a total score of 58.3 out of 100 in the...

Georgia Crime & Security

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Investors in Georgia are exposed to increased risks from weak political stability and from violent activity. Fragile relations with neighbouring Russia and the lack of membership of international organisations such as NATO mean that Georgia has little international protection should interstate conflict arise. The terror threat is high, given the presence of separatist groups as well as Georgia's pro-Western foreign policy which renders it a potential target for anti-western terrorist groups. The latter risk is low however, given Georgia's lack of great power status. The dearth of infrastructure to protect against financial and cybercrime fraud also presents some risks for businesses, while the prevalence of hardship pay ramps up the business costs of crime. Taking these factors into consideration, we award Georgia a score of 49.5 out of 100 in BMI's Crime and Security Index, which places the country 18th out of 31...

Georgia Labour Market

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BMI View: Georgia's attractiveness as an investment destination is underlined by the low cost and high flexibility of the labour market. Businesses benefit from a highly productive workforce characterised by infrequent industrial action. The small size of the country's population, an ageing population demographic and high emigration levels, will nonetheless restrict recruitment options over the medium term, requiring businesses to increasingly source labour from abroad. Businesses requiring highly qualified labour will face further shortages due to the low numbers of science and technology graduates, as well as additional costs due to visa restrictions required to employ individuals with specific skill-sets. Overall, however it is the cost efficiency of Georgia's labour market which elevates the country to rank 2nd out of 31 emerging European states, with a score of 64.9 out...

Georgia Logistics

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BMI View: Georgia's transport and utilities infrastructure continues to meet the demands of industry and supply chains, supported by its robust economic growth. Businesses currently benefit from a reliable and inexpensive supply of utilities, but this supply is likely to be strained as the country's key industries - agriculture, tourism and small-scale manufacturing - grow. In addition, the transport network is able to cater for supply-chain needs and is undergoing investment in order to enable Georgia to attain the role of a major transit point for trade flows between Europe and Asia. Georgia is ranked relatively highly in the Emerging Europe region in the BMI ...

Georgia Trade & Investment

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BMI View: Georgia has emerged as the most open and business-friendly economy among former Soviet states thanks to sweeping reforms enacted over the past decade. Drastic changes have been made in all areas of the country's operating environment, resulting in lower trade barriers, few regulatory restrictions on FDI, a reduced fiscal burden on businesses, more efficient bureaucracy and greater transparency in government. Nevertheless, some barriers to FDI remain, including limited access to financial products, difficulties with resolving commercial disputes and lingering concerns over corruption. Moreover, investment will be curtailed due to the fractious relationship between Georgia and Russia, which may once more deteriorate to the point of armed conflict. Consequently, the country receives a score of...

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