[Economics] The small country whose economy has grown 10% this year thanks to the war in Ukraine

[Kyro]

 

The war in Ukraine has caused a spectacular economic boom that Georgia, a small former Soviet republic, did not expect.

With 3,700,000 inhabitants and located on the southern border of Russia, the country has received thousands of Russian immigrants and an unprecedented flow of capital since the war began.

Its economy, whose growth was around 5% before the war, has soared to 10.2% so far this year.

"There is a gigantic increase in the flow of Russian money that has entered the country," Yaroslava Babych, director of the Center for Research on Macroeconomic Policies at ISET-PI, at the International School of Economics at Tbilisi State University, tells BBC Mundo. , Georgia.

The researcher calculates an entry into the country of US$1.4 billion between January and October of this year, 3.6 times more than the flow in the same period of 2021.

It is very difficult to know the exact number because visitors from countries like Russia, Ukraine or Belarus who cross the border do not need to explain if they are going on vacation or living in Georgia.

In fact, when they are in the country, they can live and work for a year without any problem.

In addition, they can leave the country and re-enter to stay another year and, in this way, thousands of people have managed to settle in Georgia without restrictions.

"It is a very generous immigration policy," says Babych in dialogue with BBC Mundo.

Although the flow of Russian migrants has been constant since the war began, two waves have been identified: one in May and another in September, the latter linked to the rapid departure of men from Russia after President Vladimir Putin announced a mandatory conscription to fight on the battlefield.

This is how the latest wave of Russians has become evident in cities like Tbilisi, with long lines to enter the banks and a high demand for rentals that has pushed prices to levels never seen before, generating discomfort among locals who cannot pay such high prices.

Russian companies in Georgia
It is very easy to create a company in Georgia for a foreigner. In just a couple of days, Babych explains, a firm can be registered, a reality that differs sharply from the bureaucracy that an entrepreneur can find in any other part of the world.

The number of companies registered by Russian citizens has skyrocketed so far this year: 10 times more than in 2021.

Between January and September alone, Russian citizens registered nearly 9,500 signatures in Georgia, says the economist.

The vast majority registered as people starting their own business, a situation that makes it very difficult to know what they do.

In addition, the opening of bank accounts of Russian citizens has grown rapidly.

https://www.bbc.com/mundo/noticias-63868027