Georgia Country Report Jun17 - H1, 2017

July 10, 2017

Georgia, the small South Caucasus country of 3.9mn, grew by 5% y/y in the first quarter of the year and 4.2% y/y in January-April. The Georgian economy mildly decelerated from 2.9% in 2015 to 2.7% in 2016. A small and outward-looking economy, it has been hit by the economic slowdowns experienced by Georgia's main trade partner countries - Azerbaijan, Turkey, Armenia and Russia. Nevertheless, Georgia has been doing well compared to its regional peers and is expected to remain the fastest growing economy in the South Caucasus this year.

Poised to grow by 3.5% y/y in 2017, the Georgian economy has attracted more foreign direct investment (FDI) in recent years compared to neighbouring countries thanks to higher overall GDP growth, business friendly policies, and the development of sectors like gas transit, real estate, transport and tourism.

In the last two weeks, Georgia has come under fire for sacrificing human rights for the sake of its commercial ties with Baku and Ankara. An Azerbaijani dissident living in Tbilisi was abducted and resurfaced in Baku the next day and a Georgian court decided to extradite a Turkish educator for alleged ties with an organisation that Ankara has outlawed as a terrorist organisation. In both cases, human rights activists claimed that the charges were trumped up and that the two men now faced torture and unfair trials in their countries of origin.

Proposals for radical constitutional amendments continue to divide society as consultation period approaches its end. Georgia's parliament has begun discussions on constitutional changes that would make fundamental changes to the distribution of executive powers in the state, according to Radio Free Europe/Radio Liberty.

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