“Manna from heaven” fell on Georgia. Economic boom in the Caucasus republic. What is going on?

The conflict in Ukraine, from which Georgia expected a collapse of the economy and a recession, quite unexpectedly turned into economic growth, writes Haqqin from Azerbaijan. Cargo, Russian “nerds,” and dollars poured into the country.

By Tengiz Ablotiyah

When you say the words: “To whom war and mother-in-law are dear,” they, as a rule, leave an unpleasant residue. Because immediately, there are associations with moral lawlessness, looting, or something else unworthy.

Like someone dies or becomes handicapped, and you use these troubles to line your pockets.

On the rare occasions when war brought economic benefits to a state, its leaders were embarrassed to admit it.

But sometimes, a war without any negative context is really “mother-in-law” because it can quite unexpectedly bring tangible economic preferences.

It would seem that yesterday you watched the conflict unfolding with horror, calculated the losses, and grabbed your head in anticipation of the economy’s collapse.

And then, all of a sudden, it was as if someone up there understood the reason for your fears and decided to help.

In such cases, professional writers use the expression “divine chance”. That’s the case we’re talking about.

When the conflict in Ukraine began, Georgian economists and experts sadly predicted an imminent, comprehensive economic catastrophe for the country.

In fact, it was difficult to accuse them of excessive pessimism since Russia and Ukraine – both in terms of exports and tourism – are Georgia’s two largest trading partners.

It was still possible to bear the loss of one of them.

But the simultaneous loss of the export markets of Russia and Ukraine, as well as the complete or even partial cessation of the supply of air from the oxygen cushion called “tourism”, threatened Georgia with the collapse of the national economy for a long time.

As if anticipating the impending shortage of dollar cash, the national currency of the Georgians floated in the direction of infinity, dropping in some two or three days from 2.8 to 3.4 lari per dollar.

And since there was nothing to stop the free fall of the national currency, clouds of hyperinflation began to thicken over the financial system of Georgia.

In short, only a miracle could save the Georgian financial system and the country’s economy, which even children do not believe in in our pragmatic times.

And then suddenly, quite unexpectedly for everyone, planes from different cities of Russia began to land one after another at the Tbilisi airport, packed with young people with the appearance of classic “nerds” – disheveled glasses with friends, with wives, often with dogs, less often with children, and mostly singles.

And if, at first, few people understood what was actually happening, then after a few days, the amazed Georgians realized with piercing obviousness: These “nerds” with Russian passports and laptops under their armpits are now their new compatriots.

At least for a while.

There would be no happiness, but misfortune would help. In short, Georgia overnight became one of the centers of mass Russian emigration.

Georgians, stunned by surprise, silently watched as new expats lined up for bank accounts, ran in search of rented housing, becoming more expensive every hour, looking for suitable food for their dogs and cats …

And then a second surprise followed, which also collapsed on the heads of Georgians without any warning– alternating pictures of multi-kilometer queues of freight transport lined up on the borders of Georgia suddenly appeared on the airwaves of local and foreign television companies.

And not that it directly struck my compatriots – congestion at the borders has always been a familiar and even routine sight.

But what happened after the sudden influx of “nerds” was already acquiring an epic character, approaching the scale of a humanitarian catastrophe.

Not only customs officers but also the heads of the Georgian ports, from Poti to Batumi, which were packed to the limit, spoke about border congestion, in which cargo simply did not have time to be processed, and wagons with goods stood unloaded on spare tracks for several weeks …

As it turned out, part of the transit from Central Asia and China went because of the sanctions against Russia in the South Caucasus, that is, through Azerbaijan and Georgia, which were completely unprepared for this transport of “manna from heaven”.

Let’s be honest: in many respects, this unpreparedness was of an objective nature – neither Baku nor Tbilisi, even in the most optimistic forecasts of their economists, expected such a rapid growth in cargo traffic.

And not stretched in time, as it usually happens, but avalanche-like, which hit the Azerbaijan and Georgia transport systems in just two or three weeks …

At first, the Georgian people did not understand anything at all.

Unlike its national currency, which immediately began to strengthen.

And so quickly, no one even had time to ask: “Hey, government and national bank, will you at least explain what is happening?!”

And what happened was that in just two or three weeks, the lari not only returned from 3.4 to 2.7 per dollar but also crawled even lower.

Yes, it strengthened so unequivocally that the National Bank of Georgia had to urgently sell more than US$100 million on the market so that the lari, God forbid, would not become stronger than the national currency of the United States.

Well, over time, came an understanding of the scale of both phenomena.

From March to September this year, 112,000 citizens of the Russian Federation and about 30,000 citizens of the Republic of Belarus moved to Georgia.

We are silent about Ukrainians, most of them are refugees, so it would be ridiculous and unethical to expect any contribution to the Georgian economy from them.

In just a few months, Georgia’s population of 3.7 million has grown by about 150,000, mostly young, energetic, educated, and creative people.

Most of them continued to work “remotely”, and their very large salaries are now spent not in Moscow and Novosibirsk but in Tbilisi and Batumi.

Moreover, wealthy Russians open a business in Georgia, buy apartments here and transfer their capital to Georgian banks.

In January-March 2022, an average of US$24 million was transferred from Russia to Georgia every month, and since April, US$133 million has already been transferred.

Remittances from Russia to Georgia reached a record high in May of $314 million. In total, in the first nine months of 2022, US$1.135 billion was sent from Russia to Georgia.

In 2022, Russian citizens purchased more than three thousand apartments in Georgia, and in the period from March to September, about 9,500 Russian companies were registered in Georgia, which is ten times more than in the whole of 2021.

Thus, on the example of simple and non-comment-free figures, it is possible to understand how the conflict could become a “native mother” for Georgian banks and its real estate market, tourism, restaurants, and other services.

As for the situation with transit, everything is not so simple since we are talking about more subtle matters – changes in this market are much more difficult to track.

At the moment, it is only known that transit through the “Middle Corridor” territory has grown by 30 percent, and this is only the beginning.

If Azerbaijan and Georgia manage to solve the infrastructural difficulties that inevitably arise with such a rush, the transit flow will certainly grow.

The conflict in Ukraine, from which Georgia expected an economic collapse and recession, quite unexpectedly turned into an economic growth of 10 percent.

And now tell me: who on Feb. 24, 2022, could have predicted such a development of events?

Perhaps someone will say that I contradict myself and that increasing economic growth at the expense of deaths, mass destruction, and broken existences accompanying any armed conflict, including the conflict in Ukraine, is immoral.

To justify Georgia and Azerbaijan, I can say only one thing: the economic growth of our countries is in no way connected either with Russia’s assistance in circumventing economic sanctions or with any other actions that can help Russia or harm Ukraine.

And then, when this conflict began, neither Azerbaijan nor Georgia asked about anything.