Its economy, whose growth was around 5% before the war, has soared to 10.2% so far this year.
“There is a gigantic increase in the flow of Russian money that has entered the country”Yaroslava Babych, director of the Center for Macroeconomic Policy Research at ISET-PI, at the International School of Economics at Tbilisi State University, Georgia, told BBC Mundo.
The researcher calculates an entry into the country of US$1.4 billion between January and October of this year, 3.6 times more than the flow in the same period of 2021. POn the other hand, Georgia’s currency, the lari, has seen a 15% gain against the dollar so far this year.
strong Russian migration
Although estimates vary, it is estimated that, since the start of the war, they have migrated to Georgia, between 70,000 and 100,000 Russian citizens. It is very difficult to know the exact number because visitors from countries like Russia, Ukraine or Belarus who cross the border do not need to explain whether they are going on vacation or living in Georgia.
Although the flow of Russian migrants has been constant since the war began, two waves can be identified: one in May and another in September, the latter linked to the rapid departure of men from Russia after the president Vladimir Putin will announce a mandatory conscription to fight on the battlefield.
Russian companies in Georgia
It is very easy to create a company in Georgia for a foreigner. In just a couple of days, Babych explains, a firm can be registered, a reality that differs sharply from the bureaucracy that an entrepreneur can find in any other part of the world.
The number of companies registered by Russian citizens has skyrocketed so far this year: 10 times more than in 2021. Between January and September alone, Russian citizens registered nearly 9,500 signatures in Georgia, says the economist.
The vast majority registered as people starting their own business, a situation that makes it very difficult to know what they do. In addition, the opening of bank accounts of Russian citizens grew rapidly.
The risk of a “boom turned bang”
As a former Soviet republic that fought a brief war with Russia in 2008, Georgia’s relationship with its neighbor is complex, and some Georgians fear the sociopolitical impact Russian migration could have.
The recent influx could become a “boom turned into explosion”says Mikheil Kukava, head of economic and social policy at the Institute for the Development of Freedom of Information (IDFI) think tank, in conversation with BBC Mundo.
An explosion in the sense that in the future the Russian government might consider invading Georgia, just as it did in the Ukraine.
“If they decide to invade us, the current economic growth could end up turning into a conflict”, point. Georgia and Russia drag a historical antagonism.
For now, this unexpected growth has had a strong impact in a country whose economy is based on agricultural production (grape crops, citrus fruits, nuts), mining (manganese, copper, gold), a small wine industry, in addition to the steel production and fertilizers.
Located on the border between Eastern Europe and Western Asia, on the Black Sea coast, Georgia has also seen a surge in tourism in recent years, another source of income for the country.
How long can this phenomenon last?
The government expects the current level of growth to slow in 2023, while the International Monetary Fund, IMF, estimates that growth will fall to around 5%, returning to its pre-war level.
“Capital flows are unlikely to be transformed into long-term investments”he warns. And it is possible that some social tensions appear, due to the country’s conflicts with Russia.
Source: Ambito
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