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- GDP (PPP):
- $27.6 billion
- 3.2% growth
- 3.7% 5-year compound annual growth
- $6,145 per capita
- Inflation (CPI):
- FDI Inflow:
Georgia’s economic freedom score is 73.0, making its economy the 22nd freest in the 2015 Index. Its overall score has increased by 0.4 point since last year, primarily reflecting improvements in freedom from corruption, monetary freedom, and the management of government spending that outweigh a notable decline in labor freedom. Georgia is ranked 11th out of 43 countries in the Europe region, and its score is well above the regional average.
With a 2.6-point score increase over the past five years, Georgia has registered improvements in five of the economic freedoms, including freedom from corruption, the control of government spending, business freedom, monetary freedom, and investment freedom. Achieving its highest score ever in the 2015 Index, Georgia has advanced further into the category of “mostly free.”
A decade of solid increases in economic freedom has contributed to the dynamic expansion of Georgia’s economy. Sound public finances and policies that support open markets have boosted prosperity and reinforced Georgia’s commitment to economic freedom. However, not all of the pillars of economic freedom are fully entrenched. Rule of law remains weak, and the perceived level of corruption, though improving, is higher than average for a European country.
A leading economic reformer among the former Soviet satellites, Georgia has been particularly effective in reducing regulations, taxes, and corruption. Russia invaded Georgia in 2008 and continues to occupy the territories of South Ossetia and Abkhazia. In 2012, billionaire Bidzina Ivanishvili and his Georgian Dream coalition defeated President Mikheil Saakashvili’s United National Movement. After serving briefly as prime minister, Ivanishvili voluntarily resigned in November 2013 and named Irakli Garibashvili as his successor. The Georgian Dream coalition’s political dominance was reinforced with a victory in the 2013 presidential elections. Although economic growth remains solid, foreign direct investment has decreased. Georgia has been committed to Euro-Atlantic integration. It hopes to join NATO and in June 2014 signed Association Agreements with the EU.
In 2014, a former prime minister and senior figure in the main opposition party was found guilty of corruption and misuse of public funds. Several members of the current government were also removed from office for alleged graft. Georgia continues to struggle with the lingering effects of Soviet-era corruption. There are ongoing efforts to improve the security of property rights.
Georgia’s top individual income tax rate is 20 percent, and its top corporate tax rate is 15 percent. Other taxes include a value-added tax and a tax on dividends. The overall tax burden equals 25.5 percent of domestic output. Government spending amounts to 29.6 percent of the domestic economy, and public debt is equivalent to 32 percent of gross domestic product.
The competitive and efficient regulatory framework facilitates entrepreneurial activity. With no minimum capital required, it takes two days and two procedures to start a business. Completing licensing requirements can be difficult, taking about two months on average. The labor market is relatively flexible and still evolving. Prices are generally set in the market, but the state maintains price-control measures and subsidizes fuel.
Georgia’s average tariff rate is 0.7 percent. After gaining independence, it pursued a policy of unilateral tariff cuts and free trade. Foreign and domestic investors are generally treated equally under the law. The financial sector, dominated by banks, remains stable. With the state’s role limited primarily to regulatory enforcement, banking has become more competitive. The capital market remains underdeveloped with a small stock exchange.