Investor.ge provides a brief update on investments and changes in government policy that could impact the business environment. Information in this issue was taken from agenda.ge and other sources.
Georgian GDP down 6.2% in 2020
Real growth of Georgian GDP fell by 6.2% in 2020, show preliminary data from the National Statistics Office of Georgia (Geostat). While most sectors of the economy were hammered by the epidemic, several continued to grow, such as: health and social work (7.9%), agriculture, forestry and fishing (3.6%), education (3.1%). The worst-hit sectors were accommodation and food service activities (-37.9%), transportation and storage (-22.3%), and arts, entertainment and recreation (-18.9%).
Georgia opens air borders
Georgia opened its air borders on February 1, allowing all previously functioning airlines to resume flights. Lufthansa has announced it is increasing flight frequency and even adding new destinations to and from Georgia. airBaltic has resumed flights, as has Azerbaijan’s low-cost Buta Airways. Kazakh carriers Air Astana and FlyArystan have also begun offering flights to Central Asia, while Hungarian low-cost carrier Wizz Air resumed flights from Kutaisi International Airport at the end of the month and is offering flights to 20 destinations. One airline is entering the market for the first time, with Wizz Air Abu Dhabi operating flights from Kutaisi to Abu Dhabi twice a week. Turkish Airlines, Pegasus, Ukraine International Airlines, Flydubai, Air Arabia and Qatar Airways have also resumed operations.
Turkey, Russia, China were Georgia’s top trade partners in Jan-Feb 2021
Turkey ($248.5 million), Russia ($202.7 million) and China ($193.7 million) were Georgia’s top trading partners in total external trade turnover in January-February 2021, show preliminary data from the National Statistics Office of Georgia (Geostat). In this reporting period Georgia’s top trading partners by exports were Russia ($71.1 million), Azerbaijan ($66.4 million) and China ($53.8 million), while top trading partners by imports were Turkey ($203.3 million), China ($139.9 million) and Russia ($131.6 million). Overall, Georgia’s external trade turnover amounted to $1.65 billion in January-February 2021, which is 12% lower than compared to the same period of last year. The trade deficit of Georgia in January-February 2021 amounted to $664.6 million which is 40.2% of total trade turnover. The value of exports decreased 6.8% and totalled $494.7 million, while imports also decreased 14.1%, amounting to $1.15 billion.
Georgian central bank recognized as most transparent central bank in 2020
The National Bank of Georgia has won the transparency nomination at the Central Banking Awards, which recognizes the outstanding performance and achievements of individuals and organizations within the central banking community.
The transparency nomination includes three components: education, success in targeting a full range of stakeholders, and communication across various platforms.
“When the National Bank of Georgia unveiled its new financial education website, FinEdu, last year, it represented the latest step in a series of initiatives aimed at revolutionizing transparency at the central bank. Many of these changes followed the appointment of Koba Gvenetadze as governor in March 2016,” Central Banking wrote. In recent years, the transparency award has been granted to the central banks of New Zealand, Czechia, Canada, Ireland, Israel and Sweden.
How much were Georgians earning in Q4 2020?
Average monthly nominal earnings in Georgia decreased by 5 GEL (0.4%) in the fourth quarter (Q4) of 2020 as compared to the same period of the previous year and amounted to 1,314 GEL, reports the National Statistics Office of Georgia (Geostat).
The highest monthly earnings were observed in the following fields: information and communication – 2,199 GEL (+6.2% y/y), construction – 2,061 GEL (+1.2%), professional, scientific and technical activities – 2,020 GEL (-8.8%), and financial and insurance activities 2,017 GEL (+4.2%).
In Q4 of 2020 the average earnings for women reached 1,022.3 GEL, while men earned an average of 1,581.5 GEL per month. The annual growth of earnings for women amounted to 3.8 GEL, while for men it decreased by 11.7 GEL.
Georgia, EU consider high-voltage transmission line along Georgia’s seabed to connect Georgia-EU energy systems
Georgia and the European Union are discussing the possibility of laying a high voltage transmission line along Georgia’s Black Sea seabed to connect the Georgian and EU energy systems, Georgian Economy Minister Natia Turnava announced in mid-March.
Turnava said that this was one of the issues discussed at the 6th EU-Georgia Association Committee meeting in Brussels, and that the World Bank may be ready to finance a technical and economic study for the project.
Money transfers to Georgia up 17.5% in February 2021
Georgia received $161.4 million from abroad in February 2021, which is 17.5% more than the amount received in February 2020, says the National Bank of Georgia.
Italy ($28.55 million), Greece ($19.71 million) and Russia ($25.14 million) were the largest sources of remittances in February 2021.
EU countries accounted for 44% of all remittances to Georgia and 24% of the growth in inflow volume. Inflows were down from Russia (-12.3%), the UK (-24.9%) and Poland (-11.7%). Countries representing significant sources of inflows that picked up in February included the U.S. (+32.9%), Ukraine (+78.2%) and Turkey (+10.1%), much of which is attributable to wire transfers and other electronic means of remittance.
Overall, the vast majority (94.8%) of all money transfers from abroad came from 19 countries.
Sakura 2020: Georgian wines win one silver, 13 gold medals in Japan
An international wine competition judged exclusively by 186 Japanese female wine specialists has awarded Georgian wines with one silver and 13 gold medals this year, announced the Georgian National Wine Agency. The winning Georgian wine companies were: GWS Winery with four golds; Chateau Mukhrani with three golds; Kindzmarauli Corporation Winery with two golds; Mtevino with two golds; Schuchmann Wines with one gold; Vaziani Company with one gold; and Pavillion Wines with one silver.
More than 4,000 wine varieties from 32 countries were represented at the eighth Sakura Japan Women’s Wine Awards 2021.
2020 data: Foreign direct investments down 52.9% in Georgia
Foreign direct investments (FDI) in Georgia amounted to $616.9 million in 2020, down 52.9% from 2019, Geostat reports.
Transfers of ownership from non-resident to resident units in several companies is considered to be the main reason for the decline of FDI, which reduced the value of foreign direct investments by $340.5 million. The top three countries that invested the most in Georgia in 2020 were: the United Kingdom with $307.8 million (49.9%), the Netherlands with $172.1 million (27.9%) and Turkey with $108.1 million (17.5%).
The largest share of FDIs was registered in the financial sector, reaching $400.3 million in 2020, the mining sector was the second with $101.5 million, which was followed by the real estate sector with $71.8 million.
Georgia’s new rules on international travel
Georgia eased entrance requirements for international travellers as of February 1. Foreign travelers must now present a certificate proving they have undergone a complete course of Covid-19 vaccination. If a foreign traveler has not and is traveling from the EU, Israel, Switzerland, the U.S., Saudi Arabia, the UAE or Bahrain, he or she can present a negative PCR test result taken within the past 72 hours. For this latter group, foreign citizens are obliged to do another PCR test on the third day following their entry into the country.
2021 index of economic freedom: Georgia 12th in world, 7th in Europe
Georgia received an economic freedom ranking of 77.2 in the 2021 Index of Economic Freedom from the Heritage Foundation, making its economy the 12th freest in 2021.
“Its overall score has increased by 0.1 point, primarily because of an improvement in the government spending score. Georgia is ranked 7th among 45 countries in the Europe region, and its overall score is above the regional and world averages,” the index report reads, mentioning that the Georgian economy suffered “only a small setback this year in its long progression to the upper ranks of the mostly free category.”
“Multi-year reforms to reduce corruption, cut regulation, and simplify taxes have led to upward movement in all aspects of economic freedom. Achieving a top-10 ranking, however, will require even more intensive efforts to improve perceptions of government integrity and judicial effectiveness,” the report continues.
Georgia scored highest in fiscal health (94.9), tax burden (89.1) and trade freedom (86). It had its lowest scores in property rights (66.9), government integrity (64.6) and judicial effectiveness (59.3).
Georgian products with Turkish inputs to be exported to EU under DCFTA
Georgia-made products that include Turkish raw inputs will be exported to the EU “in the near future” under the DCFTA diagonal cumulation, signed between Georgia, EU and Turkey on March 20, 2018, the Georgian Ministry of Economy announced in early March.
The ministry reports that diagonal cumulation will support the further development of the following sectors in Georgia: textiles, furniture manufacturing, construction products, plastic products, steel products and paper and cardboard.
“In general, the introduction of diagonal cumulation will increase the range of produce that can be exported to the EU, as well as it will encourage investments from Turkey in the Georgian economy, will help to establish joint companies and create new jobs” Georgian Economy Minister Natia Turnava said.
Diagonal cumulation will not apply to agricultural produce, as customs agreements between the EU and Turkey does not cover agricultural produce.
Unemployment increased by 3.8% to 20.4% in Georgia in Q4 2020
In the fourth quarter of 2020 the unemployment rate increased by 3.8% as compared to the same period of last year, rising to 20.4%, show data from the National Statistics Office of Georgia (Geostat).
As for the distribution of labor between the sexes, “Traditionally, the unemployment rate is higher for men than for women. In the fourth quarter of 2020, this indicator increased for women by 2.5 percentage points, while it increased by 4.7 percentage points for men,” Geostat stated, commenting on the data.
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