The Georgian Economy Under Russian Aggression
By M. Alkhazashvili
Monday, August 11The impact war has on an economy is clear. Russia’s aggression could create serious problems for Georgia. Everything depends on the duration of the war and the way it develops. If Russia continues attacking economic targets, or imposes additional sanctions against Georgia, the economic situation in the country could become very dramatic.
If a war ends quickly however, the economic problems it creates need not be so grave.
The economic expert and former MP and minister Lado Papava suggests that Georgia currently has enough economic resources and capacity to absorb the effects of a small scale war. But if the conflict drags on the results could be very painful. Inflation could rapidly increase, foreign investment could stop, the banking system could be badly damaged, a lack of imported goods could create problems, etc. The consequences could be even more severe if Russian bombs hit Georgia’s essential energy pipelines.
Moscow’s next step is not easy to predict. It has already started implementing some new economic sanctions such as suspending civil aviation flights to Georgia, but the economic sanctions imposed by Russia two years ago have failed to engineer the collapse of the Georgian economy.