17, July,2009 Influience of the Gobal Finnancial crisis on the Economic development of Georgia Tokmazishvili Mikheil UNDP- “Gender and Politics in South Caucasus” programme

17, July,2009 Characteristics of the Global financial Crisis Prices on the flats and constructions (“Bubble”). Postponing of the obligations by the householders and interest growth. Decrease of the sale of securities (loans) on the houses Believer of the investors to the security markets and mortgages failed Increased TED spread (ratio of the inter banks interest rate (LIBOR) and T-Bill rates ), that was credit risks growth indicator

17, July,2009 Precondition of Recession in Georgia  Increase of the prices on construction  external reasons of the recession – decrease of the foreign credits and FDI  Decrease of the foreign demand caused failed of the commercial financial resources

17, July,2009 Precondition of Recession in Georgia  Attractiveness of the consumers loans. In decreased by 40 percent  Decreased loans in Agriculture, industry and construction by 76 percent and in health care - by 36 percent  Increased loans in transport communication and education

17, July,2009 Crisis channels Demand Fall on local output and production FDI Scarce financial flows Fall of consumption prices

17, July,2009 External Demand fall Import decrease prevailed of import Import – oil and oil production, care, pharmacy goods etc Export - manufacturing production, machinery, mechanic devices, beverages and nuts Conclusion: Decrease on external demand caused limitation of output and labor in the fields, which traditionally is considered as males employment and source of their primary incomes

17, July,2009 External Demand fall (Georgia Export/import)

17, July,2009 FDI and Scarce financial flows FDI decrease caused economic activities fall Reduction of meditations of banks Conclusion: limitation of economic activities cause fall of the populations incomes and increase of unemployment. Banks stopped to play financial injections role.

17, July,2009 Consumer prices fall CPI_ fall- way out from the crisis Governmental interventions increase demand on output and hampers prices fall Forms of State intervention in Georgia Indirect financing of uncompleted constructions Commercial banks, loans, obligations

17, July,2009 Conclusion: Drawling recession Problem of inflation Growth rate Dynamics of prices

17, July,2009 Crisis Messages Global financial Crisis has a serious impact on Georgia Economic growth failed rapidly, inflation n reduced slowly Increased pressure on fiscal and payment balances Risks remained dominant New challenges of Policy Keep stabilization and support aggregate demand while FDI is reducing Decrease uncertainty of financial turmoil Keep middle term goals Neutralization of social tense

17, July,2009 Policy challenges  Fiscal measurement in context of deterioration of ye investment environment  Monetary policy against decrease of demand for reducing CPI

17, July,2009 G Policy challenges: gender results Increase unemployment – construction – increase of male unemployment Loans problem – increase gender disproportions Bankruptcy of small and medium entrepreneurs decrease of family incomes and employment

17, July,2009 SME share turnover24 22,52318,714,515,6 outcome20,6 20,321,518,916,117,3

17, July,2009 Policy challenges: gender results Expected scenario:  Self-employment growth  Increase role of women\  Municipality expenditures decrease on kindergartens and another social needs  Health care expenditures growth by households