The World Bank has launched the Systemic Country Diagnostic (SCD) Update for Georgia. The report, titled “Georgia: Keeping the Reform Momentum”, provides a comprehensive analysis of development challenges and opportunities for the country to accelerate progress in poverty reduction and shared prosperity in a sustainable way.

The SCD Update suggests clear priorities for Georgia: strengthening the quality of education, improving land use, adaptation to climate change, and building resilience to shocks. Other important areas include increasing labor force participation, boosting access to finance, digitalization, innovation, investing in energy efficiency, supporting renewable energy development, and improving the enforcement and predictability of laws and regulations.

“Georgia has a solid foundation but needs to step up reforms in order to achieve inclusive and sustainable growth in the face of global trends such as the climate transition or digitalization and automation,“ said Rolande Pryce, World Bank Regional Director for the South Caucasus. “Attention to the priorities identified in the SCD Update can help the country to stay on a strong growth trajectory, while creating better opportunities for all.”

According to the report, Georgia has demonstrated resilience amid a rapidly changing external environment partly due to sound macroeconomic management. However, the SCD points out that poverty reduction has decelerated in recent years, and the country faces challenges in creating high-quality jobs. Firm-level data analysis conducted shows that total factor productivity at the firm level has been flat, possibly hindering employment opportunities.

“Georgia has a long track record of implementing broad economic and governance reforms to maintain macroeconomic stability, streamline its business environment, and strengthen public finances,” said Lasha Khutsishvili, Minister of Finance of Georgia. “The Government of Georgia is committed to implementing further reforms to achieve our ambitious goals advancing climate and energy, sustainable economic development, and good governance.”

The report highlights that Georgia has experienced natural capital degradation, partly driven by lack of sustainable agricultural practices and inefficient land use, and has so far been unable to decouple carbon emissions from economic growth.

The SCD Update has been prepared following consultations with the government officials, as well as the representatives of the private sector, development partners, civil society organizations, and academia.

The previous SCD, published in 2018 and titled “Georgia: from Reformer to Performer,” laid the foundation for understanding Georgia’s economic growth and inclusion challenges. The 2023 SCD Update builds upon this foundation and addresses the rapidly changing megatrends that require increased focus on resilience. It was conducted upstream of the Country Partnership Framework (CPF), which is a framework used by the World Bank to engage with member countries and support their development goals. The updated CPF for Georgia will be launched in 2024.