While the newly elected President of Georgia Giorgi Margvelashvili together with his supporting ruling political coalition Georgian Dream and Prime-Minister himself indulges in euphoric position of trust and success prior to actual stepping in his office term, the country nurtures hopes for new economic development and prosperity promised by Margvelashvili as his key beat during the pre-election campaign.
First of all, business community and sector pundits expect political stability, restoration of justice as well as the rule of law and free market competition - all factors that make for auspicious business climate in any country and which have been suppressed by previous power from 2004 to 2012, when the power changed and Georgian Dream won the parliamentary elections in October 2012, beating ex-ruling United National Movement. However, as the post of President was held by Mikheil Saakashvili, Leader of National Movement and key figure to whom the autocratic rule of country’s political and economic life was imputed, Georgia was thrown into diarchy despite the declared cohabitation policy. This dual power was named as one of the major factors hampering investments inflow and economic development during this year. Entire business community expected things go better as soon as a new President was elected and the dual power was put to end. Business hates uncertainty and craves for stable environment more than low taxes and administration burden, businessmen [inquired by Georgian Journal] say.
Therefore, in spite of economic slowdown this year forecasted to reach 2.5%, more than twice less than 6% strong growth in the previous year, the ruling party looks hopeful for economic growth and prosperity in the country as soon as the Presidential elections are behind. During his pre-election campaign, Margvelashvili underlined that economy will be his key priority. He promised to boost the country’s economic potential with stable environment, enhance markets and foster business activity as well as transit and export potential. To achieve these goals he named free trade with EU and US as priorities plus improved trade relationships with Russia. He also admitted that although economy dropped its speed this year, investments inflow increased compared to the past year. As a matter of fact investments inflow in the second quarter accounted for USD 232.4 million that exceeds the similar 2012 figure (USD 218 million) by 7% and slightly surpasses USD 226 million of the first quarter of this year. Not a substantial breakthrough, Soso Archvadze, an economic analyst, presumes when comparing the investment amount to relatively larger money transfers in Georgia. He expects the long-cherished political stability after the elections are over signaling go-head to investments inflow.
“Only political peace may attract investments in Georgia,” Archvadze said. Some economic pundits believe Georgian economy cannot attract any reputable investment and ensure transparent capital turnover and development unless the expiring security market is reinstated in due position.
“I expect no investments unless the law on securities market undermined by pseudo-liberal reforms of the previous authority is changed in line with best international practice and Georgian Stock Exchange gets developed,” Davit Aslanishvili, a co-founder of Georgian Investment Group+, told GJ. “Securities market is completely non-transparent and paralyzed by the current law and either the previous law should be reinstated or the current one amended properly. How investors are supposed to invest in Georgia without transparent stocks and shares transactions at Georgian companies? This trade is completely in shadow at the moment and investors see no clear picture how to handle with shares if they decide to quit therefore they will refrain to invest here until the situation gets clearer. Government had better to prompt changes to the law on securities that is pending for parliamentary decision for a year already.”