ECONOMY

Teimuraz BERIDZE, Nodar KHADURI

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Teimuraz Beridze, D.Sc. (Econ.), professor, Ivane Javakhishvili Tbilisi State University and International Black Sea University (Tbilisi, Georgia)

Nodar Khaduri, D.Sc. (Econ.), professor, head of the Macroeconomics Department, Ivane Javakhishvili Tbilisi State University (Tbilisi, Georgia)

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The past year may be regarded as a crucial stage in the development of the Georgian economy, because the time remaining until the next election roughly equals the time already served by the new administration (two years). Complex processes of structural change in the economy were set in motion not only by government action, but also by the general political and economic situation in the CIS. On the whole, 2006 was marked by economic (and, unfortunately, not only economic) confrontation between Russia and Georgia, the imposition of the first energy and transport blockade, and a ban on Russian imports of Georgian agricultural products, wine and mineral water, as well as noneconomic actions such as the deportation of Georgian citizens, refusal to grant them entry visas, etc.

Main Macroeconomic Indicators

Under the Georgian government’s Action Program, real economic growth in 2006 was projected at 7.5% with an inflation rate of about 5%, and nominal GDP was expected to reach 13 billion lari (GEL). Unemployment was projected at about 13.7%, and the exchange rate, at roughly 1.82 lari per dollar.

According to preliminary results, the country’s economy made significant progress: real GDP growth for the year is officially estimated at 9.4%. Unfortunately, prices grew faster than expected, and……….

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