Lasha Kavatadze, economist at Galt & Taggart, identifies high food prices as one of the main challenges facing the country. Speaking on the program “Business Morning,” he noted that Georgia has been experiencing double-digit food price inflation since the second half of the year.
“We must name high food prices—together with less inclusive economic growth—as the primary challenge. What does this mean? In the second half of the year, food prices have essentially been growing at double-digit rates. This affects everyone, especially low-income groups.
If we look at the structure of the economic growth we currently have, it comes from sectors where employment levels are relatively low. Those with lower incomes are less involved in these sectors. For example, information and communications is one of the main contributors to economic growth, but it is not a highly inclusive sector. Many groups have not benefited from this growth.
Therefore, when the price level is high and economic growth is less inclusive, this becomes a significant challenge.”
Kavatadze also compared the situation to a neighboring country:
“We can put this challenge in another context and compare it with Armenia. For example, in Armenia, food prices decreased in the second half of the year, while in Georgia they increased. Over the past few years, food prices in Georgia and Armenia have mostly moved in parallel, but the divergence began in the second half of this year. In November, food inflation in Armenia stood at 3.8%, while in Georgia it was slightly above 10%.
Another important point is that in Georgia, the correlation between food inflation and the FAO Food Price Index is lower than in Armenia. This means that Armenia follows international trends more closely,” Kavatadze explained.
