Overall, business and investment conditions are sound, and Georgia favorably compares to regional peers. However, there is a continued lack of confidence in the judicial sector’s ability to adjudicate commercial cases independently or in a timely, competent manner, with some business dispute cases languishing in the court system for years, - reads the US State Department report on the investment environment in Georgia in 2024.
“Georgia, located at the crossroads of Western Asia and Eastern Europe, is a small but open market that benefits from international trade, tourism, and transportation. The country has made sweeping economic reforms since 1991 that have produced a relatively well-functioning and stable market economy. In December 2023 the European Union granted Georgia candidate status and identified nine steps for the Georgian government to take to proceed with its accession process, including advancing deoligarchization and anti-corruption efforts. Georgia’s alignment with EU legislation will entail making structural reforms in many areas, including technical regulations and standards, competition law, government procurement, intellectual property rights, and sanitary and phytosanitary measures”, reads the report.
According to the document, with a favorable business climate, Georgia routinely ranks high on international rankings for transparency, competitiveness, and economic freedom.
“The average growth rate was over five percent from 2005 through 2023. Fiscal and monetary policy are focused on low deficits, low inflation, and a floating real exchange rate. The Georgian economy continued to perform well despite double shocks from the COVID pandemic and Russia’s continued invasion of Ukraine in 2022. Having recovered from the COVID-19 pandemic, Georgia’s economy rebounded in 2021, with 10.4 percent growth, and continued to outperform expectations in 2022 with 10.2 percent growth due to tourism revenues, a surge in war-related immigration and financial inflows, and a rise in transit trade through Georgia. In 2023, the economy grew 7.5 percent and inflation dropped to 0.4, marked by a return to more traditional economic drivers: tourism, increasing exports, and strong foreign capital inflows. Following three years of sustained growth, Georgia’s GDP is expected to continue this trajectory with 2024 forecasts between five and seven percent growth.
Overall, business and investment conditions are sound, and Georgia favorably compares to regional peers. However, there is a continued lack of confidence in the judicial sector’s ability to adjudicate commercial cases independently or in a timely, competent manner, with some business dispute cases languishing in the court system for years. Other companies complain of inefficient decision-making processes at the municipal level, lack of effective anti-trust policies, accusations of political meddling, selective enforcement of laws and regulations, including commercial laws, and difficulties resolving disputes over property rights. The Georgian government continues to work to address these issues, and despite these remaining challenges, Georgia ranks high in the region as a good place to do business.
The United States and Georgia signed a Bilateral Investment Treaty in 1994, and Georgia is eligible to export many products duty-free to the United States under the Generalized System of Preferences program.
Georgia suffered considerable instability in the immediate post-Soviet period. After regaining independence in 1991, civil war and separatist conflicts flared up along the Russian border in the Georgian territories of Abkhazia and South Ossetia. In August 2008, tensions in the region of South Ossetia culminated in a brief war between Russia and Georgia. Russia invaded and occupied the Georgian territories of Abkhazia and South Ossetia. Russia continues to occupy these Georgian regions, and the central government in Tbilisi does not have effective control over these areas. The United States supports Georgia’s sovereignty and territorial integrity within its internationally recognized borders and does not recognize the Abkhazia and South Ossetia regions of Georgia as independent. Tensions still exist both inside the occupied territories and near the administrative boundary lines, but other parts of Georgia, including Tbilisi, are not directly affected.
Transit and logistics are priority sectors as Georgia seeks to benefit from increased east-west trade along the Middle Corridor following Russia’s further invasion of Ukraine in 2022. The expanding Central Asian market has also driven recent increases in cargo through the Middle Corridor connecting Europe to Central Asian markets and could be the source of long-term growth for Georgia, particularly with strategic infrastructure investments and regional cooperation. In February 2023, the Georgian government announced a new tender for the development of the Anaklia port, a deep seaport whose original tender the government canceled in 2020. In March 2024, the government announced the international tender for the design and construction of Anaklia port’s marine infrastructure. In April 2024 the government announced plans to build a new Tbilisi International Airport”, reads the report.
