Pandemic, Global Economy and Georgia

On May 29, Ivane Javakhishvili Tbilisi State University (TSU) hosted a panel discussion “Pandemic, Global Economy and Georgia” organized by the Faculty of Economics and Business. Rector of TSU, George Sharvashidze; Dean of the Faculty of Economics and Business, Giorgi Gaganidze; Deputy Minister of Economy and Sustainable Development of Georgia, Ekaterine Mikabadze; Polish reformer and Honorary Doctor of TSU, Professor Leszek Balcerowicz and Director General of Policy and Management Consulting Group (PMCG), Aleksi Aleksishvili participated in the discussion. 

Dean of the Faculty of Economics and Business, Giorgi Gaganidze said that the online discussion provides an opportunity to hear expert opinions about what will be the new economic order in the world, what are the recovery plans, how we are going to fight against the pandemic, as well as the impact of the pandemic on education sphere in Georgia and worldwide. 

Rector of TSU, George Sharvashidze noted that the pandemic has caused huge problems to the world and particularly to Tbilisi State University. “First, we have to learn with our students, with our professors, with our researchers how to live in post-pandemic world, what is post-pandemic world and daily we have conversations and discussions with our colleagues in Europe in order to try to find a new place or placement for university – learning, teaching and research, because everything is changing, nobody knows what will be the future and how long it will last. The most striking thing about pandemic was immense solidarity between students, professors and all staff of Tbilisi State University, because we faced something we never imagined and that was quite a challenge for everybody,” Rector Sharvashidze said, adding that the challenges facing higher educational institutions are related to the forms of teaching, education quality, accreditation, mobility and financial issues. 

Deputy Minister of Economy and Sustainable Development of Georgia, Ekaterine Mikabadze focused on the current economic situation in Georgia amid the coronavirus pandemic, as well as on the steps Georgian government is taking to overcome the post-pandemic crisis. She said that the government carried out a number of measures to ensure health and safe environment for citizens, to ensure sustainability of health system. Mikabadze also noted that the measures carried out in the country enabled the government to gradually open economy. She also spoke about a number of measures carried out by the Georgian government to provide financial support to both vulnerable groups and economic sectors. 

Polish reformer, Professor Leszek Balcerowicz said that in discussing the economy in the context of the pandemic, one should distinguish the short-run and the long-run. “The short run is bit obvious - recession in most countries, including in Poland and Georgia. It is not the pandemic itself, but the policy reactions to the pandemic, including isolation measures, etc. and plus sharp decline in the demand of consumers for certain goods, like tourism,” he said. 

He also noted that “opening economy is very important. But one should consider the risks of the epidemics or revival of some epidemics. And this is why opening should be accompanied by certain safeguards to be ready.” 

“My view would be that, obviously regarding the fiscal side, one should let certain automatic stabilizers operate. But beyond automatic stabilizers, one should be rather cautious, prudent and one should remember what Georgia has achieved – modest, small GDP, stability and confidence, I think, confidence is extremely important for recovery. So, for monetary policy, I would, first of all, look at what are the liquidity problems in the commercial banks, but I would not go for a large monetary stimulation like QE – Quantitative Easing. And finally, I think, what matters very much is looking at what are the burdens which can be removed. I know that Georgia has been quite successful, but perhaps, some burdens have remained to be removed. And the whole policy should be forecast on increasing the confidence among the private agencies, because those factors will decide how quickly will be recovery,” Prof. Balcerowicz said. 

Director General of Policy and Management Consulting Group (PMCG), Aleksi Aleksishvili noted that in those countries with not consolidated, not centralized approaches towards the emergency managements, there was a huge chaos, because central governments, regional governments and local governments created a lot of chaos, as they had absolutely different messages and different approaches during the management of the crisis that did not happen in Georgia due to centralized processes. 

“In a small country like Georgia, free trade matters. Growth for Georgia’s economy relies on productivity and investment. So, what we definitely need to improve is to increase investments and productivity as much as possible. But we also need access to bigger markets, whether this is Europe, China, the United States, India and many other countries. We also need to improve our business environment as much as possible, including keeping low taxes, improving the judiciary system, because without that nothing will happen. I would also say that it cannot be reached without macroeconomic and fiscal sustainability,” Aleksi Aleksishvili said.