In 2004, the economy took a turn toward rapid growth as Mikheil Saakashvili became president. Administration—currently in its second term—is pinning the economy’s long-term potential on a deregulation and anti-corruption platform. Posters at the country’s two international airports remind visitors that official bribery is a criminal offense. The free-market policies of the Saakashvili administration appear to have succeeded: Georgia is now ranked 11th in the Ease of Doing Business Survey by the World Bank, sandwiched between Norway and Thailand. Russia, by comparison, is ranked 120th. See www.doingbusiness.org for further background.
With the global credit crisis, Georgian economic activity declined dramatically in 2008-09 from the double-digit growth seen in 2007. The IMF has identified five causes of this collapse: contraction of export markets, lower remittances from citizens working abroad, the freeze in international credit-markets, falling commodity prices, and capital repatriation back to major economies. Importantly, these factors largely fell outside domestic developments. The Russian invasion of August 2008 may simply have been a caustic addition to an already volatile mix of international macro-events.