Meskhia I. Professor, Head of the Department of International Business, I. Javakhishvili Tbilisi State University, Tbilisi, Georgia Shaburishvili Sh. Associate Professor, Department of International Business, I. Javakhishvili Tbilisi State University, Tbilisi, Georgia MAJOR THREATS TO ECONOMIC STABILITY IN POST-COMUNIST GEORGIA: REALITY AND PROGNOSIS Abstract The course to European values, taken by Georgia, had no alternatives. The country has gone through difficult and controversial times after gaining independence up to the present time. Despite achieving considerable success in political, economic and social fields, living standards and quality of the population still remains extremely poor. Satisfaction of public requirements significantly lagged behind the high rates of economic growth. This was caused by ineffective economic policy of the government, neglect of the role of the real sector, construction of non-economic infrastructure. The new government that came to power in 2012 fundamentally changed the focus of macroeconomic policy. The course was taken to deepen economic ties with the European Union and Russia, to restore the real sector and satisfy social needs of the population. At present, Georgia is facing a number of economic problems, which need to be solved in timely manner, otherwise macroeconomic stability of the country will face serious threats. The present work investigates two challenges with the most high-risk threats, reduction or mitigation of which depends on the country's macroeconomic stability. The highest threat is unemployment and poverty. The paper investigates the root causes and factors causing unemployment, proposals and recommendations towards increasing the level of employment are provided. The second major threat is negative balance of trade. The country‘s import exceeds its export four times that endangers both employment and monetary stability of the country. In order to avoid this danger, it is necessary to develop production of goods for export as well as the goods for import substitution and increase state support in this direction. Reduction of the trade deficit and improvement of employment rate should become the basic focus of Georgia‘s trade policy. Introduction Immediately after regaining its independence, Georgia began to build a democratic, legal state oriented to market economy. However, during the transition period the country faced serious difficulties (civil war, military activities in Abkhazia and former South Ossetian Autonomous Region, hyperinflation, economic collapse, loss of old and traditional markets, energy and transport blockade, extremely tense criminal situation, Georgia-Russia war, etc.). However, due to the reforms, the country began to overcome economic and social problems gradually. Constitution of the country was adopted, various laws were developed, Georgian national currency was adopted and a number of reforms were carried out almost in all spheres of public life 1 . However, the reforms were often random and not successive, as a result, they could not bring the desired result. Although, in recent years there were high rates of economic growth, majority of the population didn‘t benefit from that, task of reducing poverty and unemployment was not performed. Many other extremely important and pressing economic and social threats also remain in the agenda. Solution of these problems requires serious, reasonable and thoughtful activities. Making quick, momentary decisions, which was usual for the government coming to power after the Rose Revolution, had only short-term impact, which became obvious in 2012, after the new government came to power 2 . Selective enforcement of laws, violation of human rights, insecurity of property rights, elite corruption, pressure on business and other negative factors significantly endangered macroeconomic stability and economic development of the country. Simultaneous 1 Papava V., Reforming of the Post-Soviet Georgia’s EcoŶoŵy iŶ 1991-2011,GFSIS Center for Applied Economic Studies Research Paper—03.2013. 2 Meskhia I., Politial instability and economic turbulence in Georgia, Jornal ―Economics and Business‖, 2013, №5.