{"id":8241,"date":"2020-06-18T16:02:17","date_gmt":"2020-06-18T16:02:17","guid":{"rendered":"https:\/\/eprc.ge\/?post_type=news_p_type&p=8241"},"modified":"2022-02-08T16:02:50","modified_gmt":"2022-02-08T16:02:50","slug":"covid-19-in-georgia-impact-and-implications","status":"publish","type":"news_p_type","link":"https:\/\/eprc.ge\/en\/news\/covid-19-in-georgia-impact-and-implications\/","title":{"rendered":"COVID-19 in Georgia Impact and Impli\u00adca\u00adti\u00adons"},"content":{"rendered":"

As part of the project \u201cEastern Partnership 2.0\u201d, Zentrum Liberale Moderne is publishing a series of articles on the three EU member states (Ukraine, Georgia, Moldova). Three regional authors (Veronika Movchan, Irina Guruli, Sergiu Gaibu) analyze the health, political, economic and social effects of COVID-19 in their countries.<\/em><\/p>\n

2020 has been a\u00a0chal\u00adlen\u00adging year, not a\u00a0single country around the world has managed to escape or avoid the con\u00adse\u00adquen\u00adces of the pan\u00adde\u00admic and Georgia is no excep\u00adtion. As of June 9th, Georgia counts 818 con\u00adfir\u00admed cases, 686 reco\u00adve\u00adred and 13 deaths. With these sta\u00adtis\u00adtics, inter\u00adna\u00adtio\u00adnal press named Georgia as a\u00a0success case in the fight against Covid-19. Mea\u00adsu\u00adres taken by the government very much resem\u00adble those taken by other coun\u00adtries, with the dif\u00adfe\u00adrence that Georgia started to intro\u00adduce the mea\u00adsu\u00adres earlier on, already in the third week after the first con\u00adfir\u00admed case. After the first con\u00adfir\u00admed case on Febru\u00adary 26th, the Government of Georgia (GoG) opted for a\u00a0set of strict eco\u00adno\u00admic, social and cul\u00adtu\u00adral restric\u00adtions as a\u00a0disease response stra\u00adtegy, in order to coun\u00adter\u00adba\u00adlance a\u00a0not very strong health\u00adcare system which is cha\u00adrac\u00adte\u00adris\u00adtic to deve\u00adlo\u00adping coun\u00adtries.<\/p>\n

These early on mea\u00adsu\u00adres, with a\u00a0rapid response by the Government to a\u00a0nearly com\u00adplete lock\u00addown, efforts from the civil society and media, along with the high sense of respon\u00adsi\u00adbi\u00adlity and self-regu\u00adla\u00adtion prac\u00adti\u00adces from the society as a\u00a0whole have had a\u00a0success in main\u00adtai\u00adning low spread of the disease. However, the damage done to the economy paired with both a\u00a0lock\u00addown and exter\u00adnal shocks has been quite drastic, and the full-fledged impact is still to be cal\u00adcu\u00adla\u00adted. The role of inter\u00adna\u00adtio\u00adnal assi\u00ads\u00adtance cannot be over\u00adesti\u00adma\u00adted \u2013 up to 1.5 billion USD of inter\u00adna\u00adtio\u00adnal con\u00adtri\u00adbu\u00adtion for Geor\u00adgian economy has already been secured. Signi\u00adfi\u00adcant con\u00adtri\u00adbu\u00adti\u00adons come from the EU.<\/p>\n

In the health\u00adcare sector, unlike other deve\u00adlo\u00adping coun\u00adtries, thanks to its stra\u00adte\u00adgic partner \u2013 the United States, Georgia prides itself with a\u00a0labo\u00adra\u00adtory which com\u00adplies with inter\u00adna\u00adtio\u00adnal stan\u00addards. The Lugar Center for Public Health Rese\u00adarch under the Geor\u00adgian Natio\u00adnal Center for Disease Control and Public Health (NCDC) has been in the fore\u00adfront in this fight.\u00a0 The U.S government-funded Lugar Center opened in 2013 and have been under a\u00a0con\u00adti\u00adnuous dis\u00adin\u00adfor\u00adma\u00adtion attack since then. In early 2020, NCDC already reached out to the inter\u00adna\u00adtio\u00adnal part\u00adners for acqui\u00adring testing reagent which enabled the Center to engage in early stage disease moni\u00adto\u00adring and plan\u00adning. Given the Center\u2019s infra\u00adst\u00adruc\u00adture, access to tech\u00adno\u00adlogy and inter\u00adna\u00adtio\u00adnal part\u00adners\u00adhips, the Center and its staff were able to adhere to the inter\u00adna\u00adtio\u00adnal best prac\u00adti\u00adces in the fight against the spread of the pan\u00adde\u00admic. To name just a\u00a0few, each con\u00adfir\u00admed case was fol\u00adlo\u00adwed by rigo\u00adrous inves\u00adti\u00adga\u00adtion by the epi\u00adde\u00admio\u00adlo\u00adgists to detect the contact circles and putting all the con\u00adfir\u00admed con\u00adta\u00adcts in two-week qua\u00adran\u00adtine; star\u00adting from March 20th\u00a0all Geor\u00adgian citi\u00adzens cros\u00adsing natio\u00adnal border are subject to a\u00a014-day man\u00adda\u00adtory qua\u00adran\u00adtine.<\/p>\n

How the Government Respon\u00added<\/h2>\n

Georgia had time to prepare for the virus, as the first case was recor\u00added only on Febru\u00adary 26th. The first steps taken by the Geor\u00adgian government can be traced back to January. Initi\u00adally, there were soft warnings by the NCDC and the first meeting of the Inter-Agency Coor\u00addi\u00adna\u00adtion Council of the Government of Georgia to discuss the poten\u00adtial risks of the Covid-19.\u00a0 With the expo\u00adnen\u00adtial growth of the virus all around the world, Geor\u00adgian society as well as the government started to eva\u00adluate the clear threat of the out\u00adbreak. With three repor\u00adted cases, on Febru\u00adary 29th, GoG decided to shut down schools and other edu\u00adca\u00adtio\u00adnal insti\u00adtu\u00adti\u00adons.<\/p>\n

Star\u00adting from March, actions coun\u00adte\u00adring the spread of the virus became more struc\u00adtu\u00adred and complex. Namely, Geor\u00adgian aut\u00adho\u00adri\u00adties started to control the borders, espe\u00adcially for pas\u00adsen\u00adgers coming from high risk regions. By mid-March GoG gra\u00addu\u00adally started to apply mul\u00adti\u00adfa\u00adce\u00adted restric\u00adtions. Even though the number of repor\u00adted cases stood at 30, star\u00adting from March 12th\u00a0all cul\u00adtu\u00adral, edu\u00adca\u00adtio\u00adnal and sport events were post\u00adpo\u00adned and most of the work\u00adpla\u00adces shifted to distance working. Star\u00adting from mid-April, due to the under\u00adta\u00adken mea\u00adsu\u00adres, almost all types of eco\u00adno\u00admic acti\u00advi\u00adties were ceased (inclu\u00adding restric\u00adtions of inter\u00adcity travel, driving and a\u00a0curfew).<\/p>\n

Given the worsened socio-eco\u00adno\u00admic outlook, on April 24th, GoG pre\u00adsen\u00adted a\u00a0time\u00adline for gradual opening of the economy in 6\u00a0stages. It was planned to keep a\u00a02\u2011week gap between the stages, but given the impro\u00adving sta\u00adtis\u00adtics, in terms of decli\u00adning number of active cases of Covid-19, and socie\u00adtal pres\u00adsure, the government opted for a\u00a0faster reope\u00adning. The plan to reopen tourism sector from June 15th\u00a0is highly important both for the Geor\u00adgian society and the economy. GoG announ\u00adced, that Geor\u00adgian hotels will reopen for domestic tra\u00advelers from June 15th\u00a0and from July 1st\u00a0for inter\u00adna\u00adtio\u00adnal tra\u00advelers. Inter\u00adna\u00adtio\u00adnal flights are expec\u00adted to resume gra\u00addu\u00adally. \u00a0Fur\u00adther\u00admore, Georgia intends to posi\u00adtion itself by having COVID free tou\u00adris\u00adtic zones for inter\u00adna\u00adtio\u00adnal tra\u00advelers.<\/p>\n

Eco\u00adno\u00admic and Social Impact<\/h2>\n

Reports from early March had rather opti\u00admistic expec\u00adta\u00adti\u00adons. However, the fore\u00adcasts started to worsen with the spread of the virus. The com\u00admo\u00addity exporters as well as small eco\u00adno\u00admies were expec\u00adted to be affec\u00adted harsher. Given its struc\u00adture (high levels of infor\u00adma\u00adlity, domi\u00adnance of SMEs, import depen\u00addence) Georgia\u2019s economy is highly fragile towards inter\u00adna\u00adtio\u00adnal shocks. As an open economy, depen\u00addent on the inter\u00adna\u00adtio\u00adnal rece\u00adi\u00adpts from tourism, trade, invest\u00adments and remit\u00adtan\u00adces, Georgia has a\u00a0limited ability to domesti\u00adcally counter the global eco\u00adno\u00admic impli\u00adca\u00adti\u00adons of the world pan\u00adde\u00admic. Outlook for 2020 is quite unfa\u00advor\u00adable and varies by sources, on average a\u00a05 percent shrin\u00adkage of the economy is pre\u00addic\u00adted. Due to the high levels of uncer\u00adtainty, it is yet too early to fully assess the eco\u00adno\u00admic and social impact of COVID-19. However, impact of the first wave of the virus is more or less visible. Decre\u00adase in demand levels, incre\u00adase in unem\u00adploy\u00adment levels (both tem\u00adporary and long-term), incre\u00adase in poverty levels, pres\u00adsure on the natio\u00adnal cur\u00adrency, decre\u00adase in rece\u00adi\u00adpts from tourism and remit\u00adtan\u00adces \u2013 these are the most visible eco\u00adno\u00admic effects that the popu\u00adla\u00adtion of Georgia already started to feel.<\/p>\n

For Georgia, as a\u00a0heavily import-depen\u00addent country, cur\u00adrency depre\u00adcia\u00adtion trans\u00adla\u00adtes in ele\u00adva\u00adted infla\u00adtio\u00adnary pres\u00adsu\u00adres and a\u00a0heavy social impact. The government intro\u00addu\u00adced the state program for main\u00adtai\u00adning prices of primary con\u00adsump\u00adtion food pro\u00adducts. The program envi\u00adsa\u00adges sub\u00adsi\u00addies for certain impor\u00adted pro\u00adducts to keep their local price stable in the short term period. Sharp decline on the oil prices will have a\u00a0down\u00adward pres\u00adsure on the com\u00admo\u00addity prices and infla\u00adtion levels, thus slightly coun\u00adter\u00adba\u00adlan\u00adcing other nega\u00adtive shocks.<\/p>\n

In the past years, tourism became one of the important sources of inter\u00adna\u00adtio\u00adnal rece\u00adi\u00adpts for Georgia, this sector gene\u00adra\u00adtes appro\u00adxi\u00admately 11 percent of GDP. With the slow\u00addown in world tourism, it is unli\u00adkely that inter\u00adna\u00adtio\u00adnal tra\u00advelers\u2018 visits to Georgia will return to their old highs in a\u00a0short time. This will have an indi\u00adrect mul\u00adti\u00adplier impact on the adja\u00adcent indus\u00adtries, such as hotels and restau\u00adrant.<\/p>\n

Another important source of inter\u00adna\u00adtio\u00adnal rece\u00adi\u00adpts and inflow of foreign cur\u00adrency that inter alia is one of the gua\u00adran\u00adtees of strong natio\u00adnal cur\u00adrency is Foreign Direct Invest\u00adment (FDI). Pre\u00advious years saw a\u00a0stable decre\u00adase in the FDI inflow, post crisis period will heavily affect avai\u00adla\u00adbi\u00adlity of FDIs on a\u00a0global scale and com\u00adpe\u00adti\u00adtion for attrac\u00adting FDIs will be fierce. Decre\u00adase can be obser\u00adved in remit\u00adtan\u00adces (repre\u00adsen\u00adting 13.5% of GDP) from April 2020, as com\u00adpa\u00adred to the same period last year, by 43%. The volume of remit\u00adtan\u00adces sent is 58 million USD less if com\u00adpa\u00adred to last year.<\/p>\n

Eco\u00adno\u00admic impact of COVID-19 will be sub\u00adstan\u00adtial on the exter\u00adnal trade ten\u00adden\u00adcies as well. Not\u00adwith\u00adstan\u00adding the fact that there are prac\u00adti\u00adcally no restric\u00adtions imposed on the inter\u00adna\u00adtio\u00adnal trade, most pro\u00adbably, eco\u00adno\u00admic pro\u00adblems faced by the high risk coun\u00adtries will have a\u00a0spillover effect on their major part\u00adners through decre\u00adase in aggre\u00adgate demand. As of January-April, 2020, Geor\u00adgian economy saw 11 percent decre\u00adase in exports (in April, decre\u00adase in exports amount to 28 percent).<\/p>\n

Given the harsh eco\u00adno\u00admic impli\u00adca\u00adti\u00adons, the GoG announ\u00adced the Anti-Crisis Eco\u00adno\u00admic Plan, among others, these mea\u00adsu\u00adres include payment for gas, electri\u00adcity and uti\u00adli\u00adties for the vul\u00adnerable groups, co-finan\u00adcing mecha\u00adnism for sup\u00adpor\u00adting SMEs in the crisis hit sectors such as hotels and restau\u00adrants, intro\u00adduc\u00adtion of gua\u00adran\u00adtee schemes, post\u00adpo\u00adning tax lia\u00adbi\u00adli\u00adties, in col\u00adla\u00adbo\u00adra\u00adtion with the com\u00admer\u00adcial banks, payment of inte\u00adrest rates on loans were post\u00adpo\u00adned for the three-month period for both indi\u00advi\u00addu\u00adals and com\u00adpa\u00adnies. These mea\u00adsu\u00adres repre\u00adsent a\u00a0relief package in the short-term horizon.<\/p>\n

Given the bud\u00adge\u00adt\u00adary pres\u00adsure, miti\u00adga\u00adtion mea\u00adsu\u00adres will be mostly funded through the recei\u00adved inter\u00adna\u00adtio\u00adnal assi\u00ads\u00adtance, which is made up of both grants and credit schemes. Signi\u00adfi\u00adcant amount of assi\u00ads\u00adtance will come from the EU, divided into three packa\u00adges. Through the first package Georgia recei\u00adved urgent health\u00adcare sup\u00adplies and tech\u00adni\u00adcal exper\u00adtise, assi\u00ads\u00adtance to vul\u00adnerable groups, and wide liqui\u00addity support to SMEs. The second package inclu\u00added over 183 million Euros for Georgia in support to socio-eco\u00adno\u00admic mea\u00adsu\u00adres, inclu\u00adding a\u00a0con\u00adtri\u00adbu\u00adtion to brid\u00adging the finan\u00adcing gap. These packa\u00adges have brought the total COVID-related support to Georgia to 250 million Euros in non-reim\u00adb\u00adurs\u00adable grants to date. The third package inclu\u00addes 150 million Euros of loans on highly favor\u00adable terms.<\/p>\n

What\u2019s Next?<\/h2>\n

Eco\u00adno\u00admic tur\u00adnaround will be a\u00a0hard path to walk. Many of the eco\u00adno\u00admic acti\u00advi\u00adties were not just paused, exiting the lock\u00addown will not necessa\u00adrily result in getting back to normal.\u00a0 It is logical to assume that much of nega\u00adtive aspects of the shock cannot be over\u00adcome during this year even if the crisis is liqui\u00adda\u00adted by summer and signs of eco\u00adno\u00admic nor\u00adma\u00adliz\u00ada\u00adtion appear in large coun\u00adtries. It is vital to wisely use the accu\u00admu\u00adla\u00adted inter\u00adna\u00adtio\u00adnal assi\u00ads\u00adtance for ensu\u00adring long-term sus\u00adtaina\u00adbi\u00adlity and eco\u00adno\u00admic reco\u00advery. So far the mea\u00adsu\u00adres taken were direc\u00adted towards over\u00adco\u00adm\u00ading the immediate eco\u00adno\u00admic and social shocks. \u00a0Maneu\u00advering pos\u00adsi\u00adbi\u00adli\u00adties of the government of Georgia and the Geor\u00adgian economy are way more limited com\u00adpa\u00adred to deve\u00adlo\u00adped eco\u00adno\u00admies. The effec\u00adti\u00adve\u00adness of govern\u00admen\u00adtal actions will also largely depend on the speed at which the large exter\u00adnal eco\u00adno\u00admic part\u00adners of Georgia, espe\u00adcially neigh\u00adbo\u00adring ones will over\u00adcome the crisis.<\/p>\n

In the event of the second wave this fall, pre\u00advious mea\u00adsu\u00adres taken by most of the coun\u00adtries, i.e. strict lock\u00addown, might not work as effec\u00adtively due to the lower com\u00adpli\u00adance from the side of the society. The\u00adre\u00adfore, it will be important to use this time and prepare the health\u00adcare sector for the pos\u00adsi\u00adbi\u00adlity of such an outcome. 2020 is the year of par\u00adlia\u00admen\u00adtary elec\u00adtions in Georgia. After being in majo\u00adrity for two terms, Geor\u00adgian Dream will enter the pre-elec\u00adtion cam\u00adpaign running for the third term. If we will be facing the second wave this fall, the period would coin\u00adcide with the elec\u00adtion period, in this con\u00adjunc\u00adture it will be important from the side of the government not to under\u00admine holding of free and fair elec\u00adtions under the aegis of the fight against Covid-19. The\u00adre\u00adfore, the fight against the pan\u00adde\u00admic can also repre\u00adsent a\u00a0test for demo\u00adcracy along with the resi\u00adli\u00adence test of the coun\u00adtries\u2019 poli\u00adti\u00adcal, eco\u00adno\u00admic and gover\u00adnance systems.<\/p>\n","protected":false},"featured_media":8242,"template":"","websites":[19],"news_categories":[],"class_list":["post-8241","news_p_type","type-news_p_type","status-publish","has-post-thumbnail","hentry","websites-eprc"],"acf":[],"yoast_head":"\nCOVID-19 in Georgia Impact and Impli\u00adca\u00adti\u00adons • EPRC.ge<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/eprc.ge\/en\/news\/covid-19-in-georgia-impact-and-implications\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"COVID-19 in Georgia Impact and Impli\u00adca\u00adti\u00adons • EPRC.ge\" \/>\n<meta property=\"og:description\" content=\"As part of the project \u201cEastern Partnership 2.0\u201d, Zentrum Liberale Moderne is publishing a series of articles on the three EU member states (Ukraine, Georgia, Moldova). 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