Posted: 3 months ago

Giorgi Kadagidze: 5 Reasons Why This Crisis Will Be More Short-Term for Georgia Than It Seems

5 reasons why this crisis will be shorter for Georgia than it seems at first glance, former President of the National Bank of Georgia Giorgi Kadagidze posted the status on Facebook:

"1. We see an unprecedented association of the world scientific / medical community in fighting the virus. About 80 leading laboratories are undergoing research 24/7. It is expected that people will return to normal life in May/June. At the same time, our country's institutions (border guards, patrol police, desease control centers, etc.) happend to be ready to work effectively in an emergency.

2. Compared to the crisis of 2008, governments in the developed world will implement a much faster and larger stimulus package (US $ 2 trillion, EU-1 trillion, Great Britain 250 billion, etc.). Such large-scale monetary injection will be able to stimulate demand very quickly. In other words, the West will say its word again.

3. Georgia is a poorer country on average and our economy is not integrated to the point that the drop in world stock prices can have an immediate effect. The main transmission in Georgia is through trade, which is countable and predictable. In short, we can identify damage in accuracy. 

4. The balance of payments may have been broken, but if you reduce uncertainty and negative expectations, the loss will not be enough to replace it with an unimaginable task. It also helps lower world prices for oil and other commodities, which, in other equal terms, will bring the exchange rate back to equilibrium faster. This also reduces investment, but investments have been reduced so far that even more significant reductions are a little difficult to imagine.

5. The main ones affected in this process are the service sector, small and medium-sized entrepreneurs, self-employed and foreign currency borrowers. Identifying and directing all of these groups is also not a difficult task in the end.

In short, with effective management, communication and vision, it is possible to leave only a bad memory and new opportunities at the end of the year, "Kadagidze writes.