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Source: United Nations (UN); The World Bank Group
Date: 22 Oct 2008
Accessed the full article at: http://www.reliefweb.int/rw/rwb.nsf/db900SID/MUMA-7KP5DR?OpenDocument
Prepared for the Donors' Conference of October 22, 2008 in Brussels
SUMMARY OF THE MAIN FINDINGS OF THE JOINT NEEDS ASSESSMENT
Prior to the conflict of August 2008, the Georgian economy was on a strong growth track, with GDP rising by 10½ per cent annually. Rising public expenditures, financed by a substantial increase in the tax to GDP ratio, were being directed at improvements in education and health services and in targeted social assistance for the poor as well as infrastructure. Economic policies were guided by reliance on the private sector for growth in a highly liberal trade, investment and business environment. Also central to government policies were a belief in a small, effective government that formulated policies and financed services with delivery being delegated to the private sector, and an emphasis on high governance standards. The country attracted large volumes of foreign direct investment to sustain growth. Despite high growth, job creation was weak, but poverty had begun to fall.
The conflict dealt a shock to the key pillars of economic growth. There occurred a weakening of investor, lender and consumer confidence, a contraction of liquidity in the banking system, stress on public finances, damage to physical infrastructure, and increased numbers of internally displaced persons.