Georgia sees higher growth, foreign investment in 2007

"Georgia is becoming a center for doing business. Our main asset, since we don't have oil and gold, is the absence of corruption, freedom and comforts for businesses," Arveladze told Reuters in an interview.

Gross domestic product grew nine percent in 2006, according to the ministry's data. This year the government plans to accelerate growth to 10 percent -- well above the 7.5 percent expected by the International Monetary Fund.

Arveladze said a Russian trade embargo at the end of 2006, coupled with a sharp hike in Russian natural gas prices to $235 from $110 per 1,000 cubic meters, hurt growth in 2006.

"We hope 2007 will be better than the last year and we will attract more investments. Last year we got $1.12 billion in foreign investments but this year we expect more - around $1.5 billion," Arveladze said.

In a fresh boost to business, Georgia's pro-western President Michael Saakashvili has just announced plans to reduce corporate taxes to 15 percent from 20 percent.

Georgia won praise from the World Bank in its latest survey as one of the most actively reforming countries in the world.

Georgia forecasts per capita GDP to rise to $2,000 in 2007, compared with $800 in 2003 before Saakashvili came to power.

The president has pledged to press ahead with economic reforms and lead the country towards European Union and NATO membership.

Many analysts and opposition leaders say the government is not doing enough to solve unemployment and that ordinary people have yet to benefit from reforms, which Arveladze acknowledged.

"We know that for ordinary citizens these are only figures, but we ought to do everything possible so that citizens feel the connection between these indicators and their quality of life," he said.

Turkey, Georgia and Azerbaijan recently signed an agreement to jointly construct a railway branch line that will connect Georgia to Turkey. The $422 million project is expected to boost cargo transit from Central Asia and China to Europe. Reuters

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