Georgia enjoyed robust growth rates between 2004 and 2008, which were interrupted by the 2008 global financial crisis. The crisis and the post-crisis recovery revealed fundamental weaknesses in the country’s growth trajectory, which was demand led and relied mainly on high capital inflows and fiscal stimulus in the form of high capital spending, resulting in little net job growth. Total Factor Productivity (TFP) gains were limited to the non-tradables sector, and unemployment remained high and persistent.
The CEM recommended a focus on education and skills, domestic resource mobilization built on macroeconomic fundamentals, specifically on fiscal and external sustainability, and sound prudential regulation to support systemic credibility and strengthened access to finance. In particular, the CEM recommended policies targeted at incentivizing resource shifts to more productive and tradable sectors to promote growth and generate employment opportunities. The analysis was conducted in close collaboration with Government counterparts. The preparation process included policy notes, support-the-growth dialogue, and technical presentations. In addition, the team also organized a presentation for a wide range of stakeholders, such as civil society organizations, donors, and the private sector.