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

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 frozen conflict surrounding Nagorno-Karabakh.

  • The Armenian economy is likely to receive a short-term boost from its accession to the Eurasian Economic Union (EEU) in January 2015. Membership of the EEU will facilitate trade and investment flows from Armenia's primary export destination and source of FDI, Russia. Nevertheless, in the long term we believe EEU membership will hold back Armenia's economic growth potential as the economy remains reliant on Russian demand.

  • Georgian real GDP growth will remain relatively robust over the coming...

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Georgia Operational Risk Coverage (9)

Georgia Operational Risk

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The key risks to investors entering the Georgian market include the country's potential vulnerability to interstate insecurity in the face of Russian-backed unrest, 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 the range of risks posed to potential investors, Georgia has been given a total score of 49.5 out of 100 in the Operational Risk Index. This places Georgia 19th out of the 29 countries that make up the emerging Europe region, and in 83rd place globally out of 170 countries.

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Georgia Crime & Security

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Georgia poses modest security risks to foreign business travellers, expatriates and tourists. For the most part, the main dangers are petty crime, pick-pocketing and theft, rather than violent crimes or terrorism. However, separatist movements in two former Georgian states increase the risk of terrorist activity. In addition, Georgia faces an elevated risk from interstate conflict, having experienced an invasion by Russia as recently as 2008. The lack of defence agreements or security guarantees from other major powers means that Georgia remains at risk from Russian aggression, particularly given Moscow's persistently belligerent foreign policy towards its smaller neighbours. Georgia therefore scores poorly overall in the BMI Crime and Security Risk Index, with a mark of 26.1 out of 100 placing it fourth from bottom out of 29 emerging Europe countries.

Georgian authorities have been cracking down on corruption...

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Georgia Labour Market

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Georgia's labour market presents potential investors with some substantial risks and some equally substantial benefits. The key risks are the small population size, low rate of urbanisation and lack of international migrant stock. These risks are somewhat offset by the high basic skill level of the population, a result of compulsory schooling, and the lack of labour taxes, meaning the cost of labour is significantly reduced. Overall Georgia receives a score of 59.0 out of 100 for Labour Market Risk, putting the country in a healthy sixth place out of 29 countries in emerging Europe and 38th globally.

The introduction of compulsory primary schooling in Georgia significantly raised the basic skill level of the country's labour force, which now benefits from a 100% literacy rate. The country's strong record on education slides, however, in the transition to secondary education, where the enrolment and graduation rates decline heavily. The...

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Georgia Logistics

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Georgia's modest economic growth means that its transport and utilities infrastructure will continue to meet the demands of industry and supply chains over the medium term. The country's lack of natural resources, its small and poor population, and minimal efforts at economic diversification mean that opportunities for investment are limited. Agriculture, tourism and small-scale manufacturing will provide the key growth sectors over the medium term. These industries are unlikely to place a strain on the utilities supply, which offers widespread, reliable and low-cost access to electricity and water. 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 Logistics Risk Index, in ninth place out of 29 states...

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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. Consequently, the country is one of the more appealing destinations for investment in the Emerging Europe region, reflected in a score of 65.0 out of 100 in the overall BMI Trade and Investment Risk Index, placing it in ninth position out of 29 states in the Emerging Europe region. Nevertheless, some barriers to FDI remain, including limited access to financial products, difficulties with resolving commercial disputes, and lingering concerns over...

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