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2008 investment prospects disputed

By M. Alkhazashvili
(Translated by Diana Dundua)
Wednesday, January 9
Prime Minister Lado Gurgenidze insists that despite the political turmoil at the end of 2007, Georgia will still be able to attract some USD 1–2 billion in foreign investment this year, according to the newspaper Akhali Komersanti. Some independent economists, however, forecast a reduction in foreign investment in 2008.

Before the political problems in November, when an anti-government protest was violently dispersed by police and a state of emergency declared, the trend of foreign investment appeared healthy in Georgia. In 2006, foreign direct investment totaled USD 1 billion. In 2007 it reached USD 1.5 billion, according to government figures.

According to data from the first three quarters of 2007, investment was up by around 50 percent on 2006 figures. This sharp increase was thanks in part to the government’s privatization process, the newspaper 24 Saati writes.

While the prime minister lamented that Georgia lost out on USD 500 million in foreign investment due to the uncertain political situation in the final months of 2007, the government claims the investment lull will not last long after the dust settles from January 5’s presidential election.

On the other hand, economists point out that with parliamentary election scheduled for this year, the political uncertainty is far from over.

“2008 is still an electoral year in Georgia, so I do not expect foreign investment growth this year. Considering the current political situation, investment will most likely be less than 2007,” the newspaper Rezonansi quoted economist Emzar Jgerenaia as saying.