"This negative political trajectory has also consequences on the economic situation as well as on the businesses trying to operate in Georgia", - Pawel Herczynski, Ambassador of the EU to Georgia said.
The European Union on Thursday published the 2024 EU Business Climate Report on Georgia, prepared by the European Business Association (EBA). According to the report, the main challenge for European businesses operating in Georgia is political instability, which has increased particularly in the past year.
Regarding the study, EU Ambassador Pawel Herczynski notes that the regression in the direction of reforms in the country is one of the leading factors hindering the development of businesses. Pawel Herczynski also notes that the Georgian business climate is also negatively affected by the shortage of professional skills of the workforce, the economic impact of which is assessed in detail in the study.
"The European Union has been supporting the publication of EU Business Climate Report since its first edition. Built on empirical insights from the private sector in Georgia, the report captures key developments in the business and economic ecosystem, as perceived by European companies present in Georgia.
The role of private sector in driving economic growth and fostering innovation is huge and through the EU4Business initiative, the EU has been empowering businesses to thrive, innovate, and contribute to Georgia’s economic development.
This year’s report builds on the experience and findings from previous years’ publications, while offering a deeper analysis on the focus theme, which is skills development. It identifies the need to better match skills with labour market demands, as well as for a coherent and better quality skills development system.
These are key bottlenecks hindering Georgia’s competitiveness and economic growth. Human capital development and skills matching are other areas where the European Union has supported Georgia with a view to enhancing its economic resilience and sustainable growth.
The conclusions of the report will provide further benchmarks to the economic environment and business sentiment in Georgia. This is a reference document for reflection and action in the margins and beyond the European Economic Cooperation Platform, which is an inclusive forum supported by the European Union and established by the European Business Association in 2022.
In December 2023, the European Council granted candidate status to Georgia, on the understanding that nine steps are implemented. However, notwithstanding the aspiration of the large majority of the Georgian population to join the EU, the trajectory taken by the Georgian authorities since spring 2024 is incompatible with the standards expected from a candidate country. The decision to join the EU is a choice, but the enlargement process is merit-based and it depends on reforms undertaken by the candidate country. Those reforms have not happened and EU-Georgia relations have deteriorated. We strongly regret this situation.
The EU has been a key economic partner for Georgia. However, as a result of the backsliding on a number of fundamental values upon which EU – Georgia relations are built, the EU has reduced much of our assistance.
We are carrying on a substantial review of our on-going programmes. As a result of the actions taken by Georgian authorities, we will not be in a position to continue many of our excellent projects in Georgia.
This negative political trajectory has also consequences on the economic situation as well as on the businesses trying to operate in Georgia. Many companies decided to enter the Georgian market anticipating that the country would move ever closer to the EU. Many of those companies now have legitimate questions and doubts about the future of Georgia since the enlargement reform agenda is a key factor for structural, inclusive and sustainable transformation.
I would like to express my appreciation to the European Business Association for tireless efforts to represent the interests of European businesses in Georgia, as well as of Georgian businesses in the EU. You are contributing to Georgia’s European integration, despite the current trajectory chosen by the Georgian authorities. I am also grateful for our continuous cooperation on the EU Business Climate report as well as for the valuable input by all the participating business representatives and stakeholders, which contribute to making this report a success.
Businesses drives change. I sincerely hope for better days in EU-Georgia relations, and I am convinced that the business sector will play a key role in driving Georgia’s EU aspirations forward", - Pawel Herczynski said.
