From Russia with cash: Georgia booms as Russians flee Putin's war - Reuters

TBILISI, Nov 5 (Reuters) - As warfare chokes Europe, a tiny federation wedged beneath Russia is enjoying an unexpected economical boom.

Georgia is connected people to go 1 of the world's fastest-growing economies this twelvemonth pursuing a melodramatic influx of much than 100,000 Russians since Moscow's penetration of Ukraine and Vladimir Putin's mobilisation thrust to drum up warfare recruits.

As overmuch of the globe teeters towards recession, this state of 3.7 cardinal radical bordering the Black Sea is expected to grounds a vigorous 10% maturation successful economical output for 2022 amid a consumption-led boom, according to planetary institutions.

That would spot the humble $19 cardinal economy, good known successful the portion for its mountains, forests and vino valleys, outpace supercharged emerging markets specified arsenic Vietnam and lipid exporters specified arsenic Kuwait buoyed by precocious crude prices.

"On the economical side, Georgia is doing precise well," Vakhtang Butskhrikidze, CEO of the country's largest slope TBC, told Reuters successful an interrogation astatine its Tbilisi headquarters.

"There's immoderate benignant of boom," helium added. "All industries are doing precise good from micros up to corporates. I can't deliberation of immoderate manufacture which this twelvemonth has problems."

At slightest 112,000 Russians person emigrated to Georgia this year, border-crossing statistic show. A archetypal ample question of 43,000 arrived aft Russia invaded Ukraine connected Feb. 24 and Putin moved to quash absorption to the warfare astatine home, according to the Georgia government, with a 2nd question coming aft Putin announced the nationwide mobilisation thrust successful precocious September.

Georgia's economical roar - whether short-lived oregon not - has confounded galore experts who saw dire consequences from the warfare for the ex-Soviet republic, whose economical fortunes are intimately tied to its larger neighbour done exports and tourists.

The European Bank for Reconstruction and Development (EBRD), for example, predicted successful March the Ukraine struggle would woody a large stroke to the Georgian economy. Likewise the World Bank forecast successful April that the country's maturation for 2022 would driblet to 2.5% from an archetypal 5.5%.

"Despite each expectations that we had ... that this warfare connected Ukraine volition person important antagonistic implications connected the Georgian economy, truthful acold we don't spot materialization of these risks," said Dimitar Bogov, the EBRD's pb economist for Eastern Europe and the Caucasus.

"On the contrary, we spot the Georgian system increasing rather good this year, treble digits."

Yet the stellar maturation is not benefiting everyone, with the accomplishment of tens of thousands of Russians, galore tech professionals with plentifulness of cash, driving up prices and squeezing immoderate Georgians retired of parts of the system specified arsenic the lodging rental marketplace and education.

Business leaders besides interest that the state could look a hard landing should the warfare extremity and Russians instrumentality home.

TO GEORGIA WITH $1 BILLION

Georgia itself fought a abbreviated warfare with Russia successful 2008 implicit South Ossetia and Abkhazia, territories controlled by Russian-backed separatists.

Now, though, Georgia's system is reaping the benefits of its proximity to the superpower - the 2 stock a onshore borderline crossing - and a wide migration argumentation which lets Russians and radical from galore different countries live, enactment and acceptable up businesses successful the state without needing a visa.

Furthermore, those fleeing Russia's warfare are accompanied by a question of money.

Between April and September, Russians transferred much than $1 cardinal to Georgia via banks oregon money-transfer services, 5 times higher than during the aforesaid months of 2021, according to the Georgian cardinal bank.

That inflow has helped propulsion the Georgian Lari to its strongest level successful 3 years.

Roughly fractional of the Russian arrivals are from the tech sector, according to TBC's CEO Butskhrikidze and section media outlets, chiming with surveys and estimates from manufacture figures successful Russia that pointed to an exodus of tens of thousands of highly-mobile IT workers aft the penetration of Ukraine.

"These are high-end people, affluent radical ... coming to Georgia with immoderate concern ideas and expanding depletion drastically," said Davit Keshelava, elder researcher astatine the International School of Economics astatine Tbilisi State University (ISET).

"We expected the warfare to person a batch of antagonistic impacts," helium added. "But it turned retired rather different. It turned retired to beryllium positive."

NO ROOMS IN TBILISI

Nowhere is the interaction of the caller arrivals much evident than successful the capital's lodging rental market, wherever accrued request is aggravating tensions.

Rent successful Tbilisi is up 75% this year, according to an investigation by TBC bank, and immoderate low-earners and students are uncovering themselves astatine the centre of what activists accidental is simply a increasing lodging crisis.

Georgian Nana Shonia, 19, agreed a two-year woody for a metropolis centre flat astatine $150 a month, conscionable weeks earlier Russia invaded. In July, her landlord kicked her out, forcing her to determination to a unsmooth neighbourhood connected the borderline of the city.

"It utilized to instrumentality maine 10 minutes to get to work. Now it's a minimum of 40, I person to instrumentality a autobus and the metro and often get stuck successful postulation jams," she said, attributing the alteration successful marketplace dynamics to the surge of newcomers.

Helen Jose, a 21-year-old aesculapian pupil from India, has been crashing astatine her friend's for a period aft her rent doubled implicit the summertime break.

"Before it was precise casual to find an apartment. But truthful galore of my friends person been told to leave, due to the fact that determination are Russians consenting to wage much than us," she said.

University figures person besides reported important numbers of students delaying their studies successful Tbilisi due to the fact that they can't spend accommodation successful the city, Keshelava astatine ISET said.

'THE CRISIS COULD HIT'

TBC's Butskhrikidze said helium saw imaginable successful the caller arrivals to capable skills gaps successful the Georgian economy.

"They are precise young, technology-educated and person cognition - for america and for different Georgian companies this is rather a utile opportunity," helium said.

"A cardinal situation for america is technology. And unluckily connected that broadside we are competing with high-tech companies successful the United States and Europe," helium added. "To person a speedy win, these migrants are precise helpful."

Nonetheless, economists and businesses stay acrophobic astir longer-term antagonistic effects from the war, and what mightiness hap should the Russians instrumentality home.

"We don't physique our aboriginal plans connected the newcomers," said Shio Khetsuriani, the CEO of Archi, 1 of Georgia's largest real-estate improvement companies.

Even with rental prices surging, Khetsuriani says improvement companies are not keen to over-invest successful the lodging market, particularly with prices for materials and instrumentality increasing. While landlords whitethorn beryllium cashing successful connected surging rents, nett margins for flat income person hardly shifted, helium said.

Economists besides caution the roar whitethorn not last, and are encouraging the Georgian authorities to usage steadfast taxation revenues to wage down indebtedness and physique up overseas currency reserves portion they can.

"We person to beryllium alert that each these factors that are driving maturation this twelvemonth are temporary, and it does not warrant sustainable maturation successful the pursuing years, truthful so caution is needed," said Bogov astatine the EBRD.

"Uncertainty is inactive determination and the situation could deed Georgia with immoderate delay."

Reporting by Jake Cordell; further reporting by David Chkhikvishvili; editing by Guy Faulconbridge and Pravin Char

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