, machinery, aircraft and chemicals. The country imports
nearly all its needed supplies of natural gas and oil products. It
has sizeable hydropower capacity, a growing component of its energy
supplies. Despite the severe damage the economy suffered due to
civil strife in the 1990s, Georgia, with the help of the IMF and
World Bank, has made substantial economic gains since 2000,
achieving positive GDP growth and curtailing inflation. Georgia's
GDP growth neared 10% in 2006 and 2007 despite restrictions on
commerce with Russia. Areas of recent improvement include increased
foreign direct investment as well as growth in the construction,
banking services, and mining sectors. In addition, the reinvigorated
privatization process has met with success. However, a widening
trade deficit and higher inflation are emerging risks to the
economy. Georgia has suffered from a chronic failure to collect tax
revenues; however, the new government is making progress and has
reformed the tax code, improved tax administration, increased tax
enforcement, and cracked down on corruption. Government revenues
have increased nearly four fold since 2003. Due to improvements in
customs and financial (tax) enforcement, smuggling is a declining
problem. Georgia has overcome the chronic energy shortages of the
past by renovating hydropower plants and by bringing newly available
natural gas supplies from Azerbaijan. It also has an increased
ability to pay for more expensive gas imports from Russia. The
country is pinning its hopes for long-term growth on a determined
effort to reduce regulation, taxes and corruption in order to
attract foreign investment. The construction on the
Baku-T'bilisi-Ceyhan oil pipeline, the Baku-T'bilisi-Erzerum gas
pipeline, and the Kars-Akhalkalaki Railroad are part of a strategy
to capitalize on Georgia's strategic location between Europe and
Asia and develop its role as a transit point for gas, oil and other
goods.

Germany
Germany's affluent and technologically powerful economy -
the fifth largest in the world in PPP terms - showed considerable
improvement in 2007 with 2.6% growth. After a long period of
stagnation with an average growth rate of 0.7% between 2001-05 and
chronically high unemployment, stronger growth led to a considerable
fall in unemployment to about 8% near the end of 2007. Among the
most important reasons for Germany's high une