When businesses bloom in an economy, that nation finds itself on a highway of economic growth. By putting the economy of Georgia under the microscope, we can inspect the actual influence of economic growth on businesses.
The Economy of Georgia
Georgia is a picturesque European country, located at the crossroads of Europe and Asia. Enriched with a distinct culture and deep history, Georgia today is still dotted with the quaint Caucasus Mountain villages and belts of Black Sea beaches. The cobblestone streets and unmatched architecture are only some of the nuances of Georgia. On the other hand, the business environment is also quite developed. Firstly, Georgia has a solid position in the European Union’s Free Trade Area; the nation is featured in the top 10 in the Ease of Doing Business rankings maintained by the World Bank Group. Consequently, the country is known for its business-friendly environment and booming industries, especially tourism, energy, and agriculture. It is a known fact that when businesses are able to sustain themselves and thrive in an economy, it is a blatant indicator of a prosperous economy. And when the businesses bloom in an economy, that nation finds itself on a highway of economic growth.
With the commencement of 2019, setting up a business in Georgia has undergone notable fruition, parallel to the growth of the economy. With a meticulous look at the economic indicators, the apparent indicators of change become obvious and easy to pinpoint. By putting the economy of Georgia under the microscope, we can inspect the actual influence of economic growth on businesses.
The Extent of Economic Growth in Georgia
The Economic Freedom Score of Georgia is 75.9, making the economy the 16th freest in the 2019 Index. Georgia is ranked 8th out of 44 countries in the Europe region, this rank is especially beneficial as its overall score is above the regional and world averages. Georgia is cautiously optimistic about what 2019 may have in store for the country as the figures for Georgia’s economic growth in 2017 have been extremely advantageous. Producer and consumer prices in Georgia showed steep inclination in 2017. CPI annual inflation was 6%, while producer prices increased by 10.2%. The year-on-year hike in prices can be attributed to the following factors:
- Supply-side pressure due to a hike in excise taxes on fuel, tobacco products, and car imports.
- Sharp fuel price increases in the international market. This led to an increase in transportation prices and, in a roundabout way, an increase in domestic production costs.
- The nominal depreciation of the Georgian Lari with respect to neighboring countries, which contributed to the rise of import prices, in annual terms.
The Outcome of Economic Expansion on Business Environment in Georgia 2019
1. Georgia's Global Ranking
Out of 190 countries, Georgia received 9th ranking in Doing Business 2017: Equal Opportunity for All, released by World Bank. Georgia is among the top 10 global improvers for implementing reforms to their business regulations. In the European-Asian region, Georgia ranks third, with the Republic of Macedonia being the region's highest-ranked economy, followed by Latvia.
2. Trade Regimes and Agreements
The Liberal Trade Regimes of Georgia provide investors with a favorable opportunity to not just find easier access to a wider market but also to appeal the country’s 3.7 Million residents, thanks to the absence of customs and import tariffs. Till date, Georgia has signed Free Trade Agreements (FTAs) with member countries of the Commonwealth of the Independent States that include Ukraine, Belarus, Moldova, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan, and its neighboring countries: Turkey, Azerbaijan, and Armenia.
3. Georgia's stance with the European Union
The European Union and Georgia have a very close-knit and constructive relationship. This eventually gave rise to the EU-Georgia Association Agreement, which was enforced in July 2016 and strives for political harmonization and economic amalgamation between the European Union and Georgia. The EU and Georgia have also entered into a Deep and Comprehensive Free Trade Area (DCFTA), while Georgian citizens have benefited from visa-free travel to the Schengen area since 28 March 2017. The EU is Georgia's largest trading partner and provides over €100 Million to Georgia annually in the form of technical and financial assistance.
Reforms in the Business Environment of Georgia 2019
Identifying the fact that Georgia possesses a great deal of potential for business expansion in several different fields such as Manufacturing, Energy Generation, Pharmaceuticals, and Agriculture and to harness the ever-changing business environment and shifting economic factors several business reforms were brought into power.
- Property Registration: By improving the quality and efficiency of land administration Georgia has positively influenced its business environment by increasing coverage of all maps for privately held land plots in the main business city.
- Protection of Marginal Investors: Minority investors have been strengthened and supported by Georgia by increasing shareholder rights and their role in major corporate decisions, and by clarifying ownership and control structures.
- Payment of Taxes: Paying taxes has been made easier in Georgia by abolishing additional annex to corporate income tax returns. The nation has also improved the efficacy of online VAT filing systems.
- Trading across Borders: Export and import documentary compliance has become faster. Georgia has improved its electronic document processing system. Finally, it also introduced an advanced electronic document submission option.
Georgia has always been on the forefront in liberalizing economic activities in the nation. In fact, incorporation and company registration in Georgia is as simple as it can be, as it takes about two procedure and two days to complete the entire process with no minimum capital requirements. The labor market is rejuvenating with skilled labor. And another remarkable feature of the Georgian Economy is the increase in Government subsidies for green energy and transport projects, which have paved the way for an enormous potential for new businesses.
If you are interested in setting up a business in Georgia, know that the country provides a welcoming, conducive and lively business environment with abundant business opportunities.
Business Setup Worldwide is a consulting firm helping entrepreneurs and firms with company incorporation, accounting, bookkeeping, audit, intellectual property protection, and corporate secretarial services in Georgia. To know more, contact us – we’d be happy to help.