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

  • Despite an escalation in violence along the border of the disputed Nagorno-Karabakh region in July/August 2014, it is not part of our core scenario to see the outbreak of a widespread military conflict between Armenia and Azerbaijan. While the leadership of each side espoused aggressive nationalist rhetoric in order to ensure domestic support, the key powers in the region (Armenia-supporting Russia and Azerbaijan-supporting Turkey) are unlikely to favour an outbreak of conflict on their southern and eastern flanks respectively.

  • The Armenian real GDP growth will slow in 2015 on the back of declining export demand from Russia, as well as stagnating remittance growth, a key driver of private consumption. With Armenia set to join the Eurasian Economic Union on January 1 2015 we believe the economy will remain heavily reliant on Russian support over the coming years...

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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 20 th out of the 30 countries that make up the emerging Europe region, and in 80 th place globally out of...

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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 score of 26.4 out of 100 placing it fourth from bottom out of 30 emerging Europe countries.

Georgian authorities have been cracking down on corruption and...

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Georgia Labour Market

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Owing largely to poor levels of higher education and a low urbanised population, Georgia's competitiveness in the labour market is weak, relative to its regional counterparts, posing a risk to investors through a lack of localised skilled workers. In light of this, Georgia scores 58.2 out of 100 in the Labour Market Risk Index, ranking 12 th in Emerging Europe behind Belarus and one place ahead of Armenia. Globally, Georgia ranks a relatively competitive 46 th out of 170 countries, in large part thanks to the extremely low costs of labour and high scores in primary education and literacy, creating an inexpensive, but unskilled labour pool.

One of the biggest risks to the Georgian labour market is the poor secondary and tertiary education levels across the labour force; with a low scoring 79.96, 26 th regionally, for secondary school enrolment and just 52.0 for tertiary enrolment. Secondary education is...

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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 30 states...

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Georgia Trade & Investment

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Georgia suffers from low levels of imports and exports. It also is hindered by its economic underdevelopment, conducting very little trade with more wealthy Western nations, although it does count Russia as a main trading partner. Georgia scores 56.6 out of 100 in BMI's Trade and Investment Risk Index, placing it 18th out of 30 countries in the emerging Europe region, behind Serbia, which scores 57.7, and ahead of Moldova, which scores 56.3. Globally, Georgia ranks 61st out of 170 countries, one place above Costa Rica.

There has been increased foreign direct investment (FDI), primarily in the energy and financial services sectors, in recent years, but FDI levels still lag many other emerging Europe countries. Georgia has very low access to international financial markets, inhibiting its ability to utilise foreign credit for investment purposes. There are also very few listed companies in Georgia, one of the reasons it...

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