Georgian GDP rises 6.8 percent in first six months (by The Messenger)

Georgia experienced strong economic growth in the first half of 2005, with GDP rising by 6.8 percent, the Department of Statistics announced on Monday. Speaking at a press conference, Deputy Head of the Department Giorgi Kavelashvili said that growth had been particularly strong in agriculture (5.9 percent), despite last year's poor harvest and flooding this year in several regions. The statistics department deputy head also highlighted growth in the construction industry, saying that there had been 3.5 percent growth even though construction of the Baku-Tbilisi Ceihan pipeline is now virtually complete."The main factor for the growth of the building sector was the liberalization of the banking sector, which has led to a lowering of interest rates and introduction of new products," said Kavelashvili. As a result, loans increased by 32 percent in the first six months of 2005, although he added that the lack economic mechanisms (such as the development of financial markets) as well as a number of other factors was hindering the development of the banking sector. Kavelashvili announced that the level of dollarization has decreased in the country, mainly as a result of the strengthening of the lari, which was 9.7 percent stronger in the first half of 2005 than the same period in 2004. The Department claims that consumer price inflation during the first half of the year stood at just 0.6 percent, explaining that while increased duties on alcohol and tobacco had forced up the prices of these products, prices of other products such as vegetables had fallen between January and June, mainly because prices are seasonal.