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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 external trade up 12.8% in January-April 2021
Georgia’s external trade turnover amounted to $3.9 billion in January-April 2021, which is 12.8% higher compared to the same period of the last year, show preliminary data from Geostat. The value of exports increased 19.6% in the reporting period and totaled $1.19 billion, while imports also increased 10.1%, amounting to $2.7 billion. The trade deficit of Georgia in January-April 2021 amounted to $1.5 billion, or 39% of total trade turnover.

Unemployment up 0.9%, to 18.5% in Georgia in 2020
The unemployment rate in Georgia increased by 0.9% compared to 2019 and totaled 18.5% in 2020, Geostat data show. The regions with the most pronounced spike in unemployment were Tbilisi (3.8%), Kvemo Kartli (2.8%) and Adjara (1.1%). Unemployment for women increased by just 0.2 percentage points in 2020, the data show, while for men it was up 1.3%.

World’s ‘most expensive wine producer’ takes an interest in Georgian wines
Influential French winemaker Loic Pasquet, founder of the company Liber Pater and producer of the one of the world’s most expensive wines, is interested in launching his first project in Georgia together with the founder of local wine company Askaneli, Gocha Chkhaidze. The project aims to bring Georgian wine to the most expensive segment of the EU market.
“In the best-case scenario, we will be able to start producing Georgian wine that will be ready to enter the most expensive segment of the EU market in 12 years,” Chkhaidze told Forbes.
Pasquet’s most expensive wine is produced in quantities of around 1,200 bottles yearly. In 2015, only 550 bottles were made, fetching an average price of €30,000 per bottle, which makes this wine from Bordeaux one of the world’s most expensive.

January-April 21: Georgian domestic exports up 19.6%
Georgia’s domestic exports came out to $1.19 billion in January-April 2021, a 19.6% year-on-year increase, Geostat data show. The share of domestic exports in total exports constituted 73.8% and amounted to $884.2 million, a full 25% higher than the same period in 2020. The top countries that imported goods from Georgia during this time were China ($198.5 million), Russia ($146.1 million) and Turkey ($98.3 million). Copper ores consisted of nearly 30% of the total exports, with ferroalloys accounting for 12.6% in terms of value. Wine came in third, constituting 7.5% of the total value of exports.

Peculiar Rike Jugs concert, conference hall remains unsold despite despite 50% discount
Tbilisi’s quirky Rike Jugs concert and conference hall, two glass and steel tube constructions located in Tbilisi’s Rike Park, are still up for sale, despite efforts to auction them off at a 50% discount with an asking price of 47.5 million GEL, the National Agency of State Property announced in late April.
This was the fourth attempt to auction off the Rike Jugs, with “nobody announcing interest in them” this time around. The first auction attempt was held in February 2020 when the building was valued at 95 million GEL. The Rike Jugs were installed over 15,000 square meters of space in 2012. The facility was expected to serve as a concert hall in Europe Square, however, it was never completed. In total, 75 million GEL was spent on the construction of the building.

April 2021: money transfers to Georgia up 145.4%
Georgia received $194 million from abroad in April 2021, which is 145% more than the amount received in April 2020, reports the National Bank of Georgia.
Russia ($33.3 million), Italy ($31.7 million) and the United States ($24.8 million) were the largest senders of remittances in April 2021. Overall, the vast majority (94.9%) of all money transfers from abroad came to Georgia from 18 countries. Last month, remittances leaving Georgia totaled $25.8 million, compared to $10 million in April 2020.

Internet access program rolls out in remote villages in Georgia
Half a million people living in almost a thousand settlements across Georgia, including in the highlands, will soon receive internet access and services such as e-healthcare, education and governance thanks to a new project called ‘Log in Georgia.’
The project of ‘universal internetization’ in Georgia started from Ozurgeti municipality, in the Guria region, where 29,000 residents living in 49 settlements already have access to the internet.
By 2025, the project is planned to cover 1,000 settlements in Georgia, giving internet access to about 500,000 people.
‘Log in Georgia’ is implemented by Open Net in cooperation with the World Bank. The World Bank has allocated €35.7 million to support the project.

Georgian wine exports up 15% in Jan-April 2021
Georgia exported 28.3 million bottles of wine to 55 countries in January-April 2021, which is an increase of 15% compared to the same period of 2020, says the Georgian National Wine Agency.
Wine sales abroad generated Georgia $65 million in revenue, up 7% year-on-year.
The top five countries that imported Georgian wine in January-April 2021 were:
Russia – 17.1 million bottles (+16%), Ukraine – 3.3 million bottles (+9%), Poland – 1.8 million bottles (+2%)
China – 1.5 million bottles (+19%), Kazakhstan – 1 million bottles (+56%).

50-megawatt wind power plant in eastern Georgia to be launched in 2022
A 50-megawatt wind power plant near the village of Nigoza in eastern Georgia is planned to begin operations in 2022, announced the Ministry of Economy of Georgia.
Turkish company Calik Enerji is implementing the project in cooperation with the Energy Development Fund of Georgia. The $70 million project aims to employ 200 people in the construction process, while 25 people will be employed after it becomes operational.

New adviser on foreign investments
Georgian Prime Minister Irakli Garibashvili has appointed Vazil Hudak, former Vice-President of the European Investment Bank (EIB) and former Minister of Economy of Slovakia, as his special adviser on foreign investments.
Hudak will cooperate with the European Union, the International Monetary Fund, the World Bank, the European Investment Bank, the European Bank for Reconstruction and Development and other international financial institutions, as well as with the international business community, investment funds and banks in his new role.

Georgia among top-ranked countries from which to source tech services
Georgia has appeared for the first time in Kearney’s Global Services Location Index (GSLI) 2021, taking 19th place among the top-ranked countries from which to source tech services, announced the country’s export promotion agency, Enterprise Georgia.
GSLI is a biennial ranking published by leading global management consulting organization Kearney.
For 2021’s edition of the ranking, 60 countries were assessed in 47 measurements grouped in four main categories: financial attractiveness; people, skills and availability; business environment; and digital resonance.
“Georgia is at the crossroads of Europe and Asia and posts competitive rankings on financial attractiveness, workforce skills, and the business environment,” the report says.
GSLI helps companies make key location decisions about where to locate offshore operations, and the Index sheds light on their complex and shifting choices through an analysis of more than 50 countries.

Annual inflation up 7.2% in April 2021
The consumer price index increased 0.9 percentage points compared to the previous month, with the annual inflation rate amounting to 7.2%, Geostat reported.
The monthly inflation rate was mainly influenced by price changes for the following groups: transport (+3%), clothing and footwear (+4.9%), furnishings, household equipment and maintenance (+2.1%), and food and non-alcoholic beverages (+0.3%).
As for annual inflation, prices increased in the group of restaurants and hotels (+15%), health (+13.8%), transport (+12.4%), housing, water, electricity, gas and other fuels (7.1%), and food and non-alcoholic beverages (+3%).

After year long downturn, Georgian economy posts 44.8% growth in April
The estimated real gross domestic product (GDP) growth rate in April 2021 equaled 44.8% year-on-year and 8.1% in January-April of 2021 year-on-year, show preliminary data from Geostat.
The figure is reflective of the fact that Georgia experienced its strictest Covid-19-related economic lockdowns in precisely April 2020.
The Georgian economy is expected to grow by 3.5% in 2021, rebounding with the gradual lifting of Covid-19 pandemic restrictions and the revival of domestic demand, reads the Asian Development Bank (ADB) Outlook 2021.
The ADB projects Georgia’s gross domestic product (GDP) growth to accelerate to 6% in 2022, as a full reopening of the economy and expected recovery in tourism will boost travel and commerce.
The World Bank says that the Georgian economy is projected to expand to 4% in 2021 and then to firm up to 5% in 2022.

Georgian wine advertising campaign places focus on Germany
In order to raise awareness and increase the export of Georgian wine to Germany, a Georgian wine advertising campaign will be strengthened in Germany this year using various media platforms.
The campaign will be held with the financial support of the Georgian National Wine Agency and German PR and marketing company ff.k Public Relations.
Numerous presentations of Georgian wine are planned both online and in person. Georgian wines will take part in various competitions, and visits of wine professionals and media representatives to Georgia from Germany will be planned, the country’s wine agency says.
Germany has been included on the list of strategic markets for Georgian wine since 2020.
Last year, about 700,000 bottles of wine were exported from Georgia to Germany, posting an increase of 4%.

Georgian central bank raises monetary policy rate to 9.5%; loans for about 125,000 borrowers to increase 1%
The National Bank of Georgia (NBG) has increased the refinancing rate by one percentage point to 9.50%, as a result of which, loans for about 125,000 borrowers will increase by one percent, says the non-government organization Society and Banks.
Society and Banks announced that, as of April 1, a total of 124,400 loans tied to floating interest rates had been issued since the beginning of 2021. The vast majority of these loans are tied to the refinancing rate.
Tbilisi tops international cities by Bitcoin ATMs per $10 billion GDP
The Georgian capital city of Tbilisi has the most number of Bitcoin ATMs in the world per $10 billion local GDP, says a new study titled ‘World’s Most Crypto-Friendly Cities.’
“Tbilisi seems an unlikely contender for the top spot on this list of international cities pioneering Bitcoin adoption. But the former Soviet republic of Georgia, with a population of less than four million people, is now the second largest miner of cryptocurrency in the world. Inexpensive hydropower and a lack of federal regulation have turned the country into a ‘virtual printing press’ for virtual money, giving the 23 bitcoin ATMs in Tbilisi an outsized presence in the Georgian economy,” reads the study.

Georgian Finance Minister: low coupon rate on Eurobonds will save budget around 350 million GEL over next 5 years
The Ministry of Finance of Georgia completed the placement of $500 million in Eurobonds on the London Stock Exchange in mid-April, with a maturity date of five years and a coupon rate of 2.75%.
Georgian Finance Minister Lasha Khutsishvili said the state budget of Georgia will save about 350 million GEL thanks to the low coupon rate.
“The current bonds actually refinanced Eurobonds issued in 2011 at a coupon rate of about 2.5 times higher (6.875%) and were repaid on April 12 this year.
Due to the fact that the coupon rate now is much lower for the next five years, the budget will save about 350 million GEL,” said Khutsishvili.
He added that such a low rate “has never been seen before in our region.”
“With this transaction and this coupon rate, we have created a new, truly historic landmark […] which will be important for private companies, as it makes it much easier and cheaper to attract investment to our country […] This [is indicative] of confidence from international investors in Georgia’s economy […] [such] investors are mainly from the United States, the European Union and the United Kingdom,” Khutsishvili said.
Khutsishvili said that one of the main determinants of such a low coupon rate was the country’s sovereign credit rating, which has improved in recent years from “B+” to “BB”.

Is Nokia interested in entering the Georgian market?
Finnish corporation Nokia has expressed an interest in entering the Georgian market, the Ministry of Economy of Georgia says.
Georgian Deputy Economy Ministers Genadi Arveladze and Irakli Nadareishvili met with regional Vice-President of Nokia Mikko Lavanti earlier in April to discuss areas in which Nokia could invest in Georgia.
The development of broadband infrastructure, artificial intelligence, and the digital economy in general are the main directions that Nokia could find interesting in Georgia, the ministry reported.

14.5% of Georgian population receiving social assistance
In Georgia, more than 541,000 people, or 14.5% of the Georgian population, receive social assistance from the state.
This number increased by over 83,000 individuals in 2020, announced the Social Service Agency of Georgia. In addition, social assistance is the only source of income for 151,000 families in Georgia, says the agency.
The town with the highest ratio of the number of aid recipients to the population was Mestia in the Svaneti region of Georgia, where according to the latest data, 65.9% of the local population received social assistance last year.

Joint Polish-South African drone production venture may come to Georgia
A military drone venture may set up camp in Georgia, with South African and Polish companies discussing the possibility with the government, Defense Minister Juansher Burchuladze said at a parliamentary session in late April. “We are in active negotiations with South African and Polish companies to establish a joint venture of small and large unmanned aerial vehicles at the Delta base,” Burchuladze said.
Burchuladze says an agreement may be signed as early as this year, with production beginning in 2022. It is unknown what kind of drone the venture would produce.

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