POLICY PAPER Georgian economy and one year of Russia’s war

This policy note details the most pronounced and significant economic trends observed in the Georgian economy in 2022, reflect on the risks the country is facing going forward in the context of the ongoing regional war. [...] The attack of a country that was once a major energy supplier to Europe on the country who was one of the top food exporters in the world, sent food and fuel prices spiraling, caused major energy shortages and the prospect of protracted recession in the United States and the European Union. [...] Authorities in the European Union and the United States are said to be monitoring the situation and investigating whether the unusual increase in trade between EEU countries and the rest of the world can represent sanction evasion mechanisms. [...] inflation rate and real wage increases in 2022 25% 20% 15% 10% 5% 0% Cost of subsistence minimum basket, % change in 2022 CPI Inflation rate, 2022 Growing dependency on the Russian market One of the major long-term risks to the Georgian economy in 2022 is the signs of growing dependency on the Russian market of one of its most iconic domestic exports – wine. [...] Given that the war of Russia against Ukraine has entered its second year, and there are no signs that migrants will be in the position to return to Russia anytime soon, it would be advisable that Georgia assesses associated short and long- term risks and makes necessary adjustments in the migration policies in the interests of security and sovereignty on the country.