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.
World Bank: Georgian economy to grow 5.5% in 2022 and 2023, 5% in 2024
The Georgian economy is projected to grow 5.5% in 2022 and 2023, followed by 5% growth in 2024, according to the June edition of the World Bank’s Global Economic Prospects report.
The Georgian economy has “shown resilience to the economic shock induced by the Russian invasion of Ukraine so far, with the growth forecast for 2022 upgraded to 5.5% from an earlier forecast of 2.5% at the start of the war in March. The resilience is driven by the strength of the services sector, particularly in tourism, with a strong recovery in the year through May,” the report states.
As for Georgia’s neighboring countries, the World Bank forecasts that Armenia’s economy will grow by 3.5% in 2022, Azerbaijan will grow by 2.7%, and Turkey by 2.3%. Russia’s economy is projected to shrink by 8.9%.
According to the latest GDP data published by the National Statistics Office of Georgia, the estimated real GDP of Georgia grew by 2.6% YoY, while average real GDP increased by 10.8% between January-April.
$43 million added to state budget through privatization sales in 1HE 2022
Privatization sales brought in over ₾127.5 million ($43.3 million) to the Georgian state budget in the first two quarters of 2022, the National Agency of State Property announced in June.
The privatization plan in the reported period was fulfilled by 108%, the agency said, adding that the amount of money transferred to the budget had exceeded the initially planned sum by about ₾10 million ($3.4 million).
A total of ₾26.3 million ($8.9 million) was transferred to the budget of local self-government units and ₾1.1 million ($392,897) to the budget of Georgia’s Autonomous Republic of Adjara.
Additionally, the data provided by the Agency showed state-owned properties worth ₾34.8 million ($11.8 million) were sold in the first quarter of 2022, while in the second quarter of this year the figure stood at ₾92.7 million ($31.5 million).
Georgia, Qatar sign agreements to boost trade, economic relations
Georgia and Qatar are strengthening trade and economic relations by signing two agreements on Mutual Support and Protection of Investments and on Economic, Trade and Technical Cooperation, the Georgian government announced in late June. The deals were signed following a meeting between Georgian Prime Minister Irakli Garibashvili and Khalid bin Khalifa bin Abdulaziz Al Thani, the Prime Minister and Interior Minister of Qatar. Garibashvili also met Mansoor Bin Ebrahim Al-Mahmoud, the Chief Executive Officer of Qatar Investment Authority, to discuss Georgia’s investment environment and the country’s prospects of becoming a financial hub.
Annual inflation rate at 13.3% in May
The Consumer Price Index in Georgia increased by 1.1% MoM in May 2022, while the annual inflation rate equaled 13.3%, according to the National Statistics Office of Georgia. The agency also revealed prices had increased by 5.9% in annual core inflation figures, excluding food and non-alcoholic beverages, energy, regulated tariffs, and transport, while the annual core inflation without tobacco amounted to 6.7%.
PMC Research Center releases May jobs report
May witnessed a 5% YoY increase in the number of people receiving a monthly salary in the country, according to a report published by PMC Research Center in late June. The report showed a decrease in the number of individuals on a ₾600 (about $206) wage (24.3%, which is down 5.3% YoY) and an increase in the number of individuals on a ₾2,400 (about $827) wage (16.7%, which is up 4.3 % YoY).
From December 2021 to May 2022, the total number of vacancies posted on Jobs.ge website amounted to 33,703, which is 67% higher compared to the corresponding period of 2020-2021.
A breakdown of vacancies by categories was as follows: 11,339 vacancies posted under technical/logistics jobs; 9,635 vacancies in sales/procurement; and 7,123 vacancies in administration/management.
The unemployment rate in Georgia increased by 2.1% in 2021 compared to the previous year and reached 20.6% across the country, data from Geostat shows. The highest rate of unemployment was observed in the 15-19 age group (52.2%), while the indicator has traditionally been lowest in the 65+ age group (6 %) due to the ‘low activity’ of the population in this age group.
World Bank: Georgia’s banking sector ‘at forefront’ of good corporate governance
Georgia’s banking sector has been ‘at the forefront’ of implementing good corporate governance practices and helping to strengthen the country’s economic and financial development, says a report released in June by a joint World Bank-International Monetary Fund program.
Produced as part of the program of Reports on Observance of Standards and Codes, the report says that since the Association Agreement between the European Union and Georgia came into force in 2016, the legal and regulatory framework in Georgia has undergone ‘a total transformation’ with regards to corporate governance and is now ‘closely aligned’ with good practices.
World Bank Regional Director for the South Caucasus Sebastian Molineus says that over the past 20 years, Georgia has achieved ‘noteworthy progress’ in improving the country’s corporate governance framework.
“For example, [the Government has accomplished this] by adopting the new Law on Entrepreneurs and three corporate governance codes. To ensure these improvements contribute to economic growth, we believe the focus should now be on effective enforcement of the new framework, with a particular focus on improving corporate governance practices of state-owned enterprises, as well as continuous capacity building among regulators and companies to enhance corporate governance in Georgia”, Molineus added.
Tbilisi, Batumi airports among top 10 in Eastern Europe
Two major Georgian airports – Tbilisi and Batumi – have named among the top 10 airports in Eastern Europe, airport operator TAV Georgia announced on June 20.
TAV Georgia said Tbilisi International Airport had been ranked fifth in the Skytrax World Airport Awards index, with Batumi airport ranked sixth. The company said the latter airport had been ranked for the first time in the awards, while Tbilisi airport was in the index for the ninth straight year.
Exports reach record monthly high in May
Georgia exported a record $504 million of goods in May, marking a 48% increase compared to the same month of the previous year, Geostat announced in June.
Turkey ($1.02 billion), China ($783.1 million) and Russia ($764.2 million) were the top trading partners in total external trade turnover from January-May 2022, preliminary data from the National Statistics Office of Georgia shows.
Georgia’s top trading partners by exports in January-May 2022 were China ($362.8 million), Azerbaijan ($224.1 million) and Russia ($210.3 million), while the top trading partners by imports were Turkey ($830 million), Russia ($553.9 million) and China ($420.3 million).
The top three export items were: copper ores and concentrates ($465.9 million and 22.1% of total exports), ferro-alloys ($285.7 million and 13.5% of total exports), and motor cars ($191 million and 9% of total exports).
Exports of domestically produced Georgian goods were also up 37.5% YoY from January to May 2022 and valued at $2.11 billion, according to Geostat.
Communications Commission, SpaceX discuss launching Starlink satellite internet in Georgia
The Communications Commission of Georgia and representatives of SpaceX Starlink satellite internet project discussed the prospects of launching access to the service in Georgia in mid-June, the Commission has announced.
The Commission’s Ekaterine Imedadze said SpaceX was working to explore ‘niches of interest to it’ in the Georgian market and preparing for a commercial launch of Starlink internet in the country.
“I think this fact [launching Starlink internet] is a very important event for the country and the telecommunications sector, as after its introduction, satellite internet will be available in Georgia and it will open a window for the future development of the innovative digital services market,” Imedadze said.
In its statement, the Commission said access to Starlink would be ‘particularly important’ in remote mountainous regions of Georgia and settlements without broadband internet coverage.
1.2 million Georgians spend $71 million on domestic tourism in Q1 2022
About 1.2 million Georgian citizens aged 15 and above made 1.3 million monthly visits within the country in the first quarter of 2022 and spent ₾210 million GEL (about $71.43 million), the latest data published by the National Statistics Office of Georgia shows.
The figures showed the monthly average number of visitors increased by 13% compared to the same period of the previous year, while the monthly average expenditures increased by 14% YoY, Geostat said. The average expenditure per visit increased by 2% and equaled ₾152.2 (about $52).
Georgian authorities adopt IMF-supported program to address macroeconomic stability
The Georgian authorities have adopted a program supported by the International Monetary Fund focused on addressing macroeconomic challenges of the country, Bo Li, the Deputy Managing Director of the IMF, said on June 22.
Li said the IMF’s new three-year $280 million Stand-by Arrangement would be treated by authorities ‘as precautionary’, with the program aiming to rebuild fiscal buffers while reducing debt and ‘protecting the vulnerable.’
“The authorities recognize the importance of adhering to the fiscal rule to anchor policy credibility and are targeting full compliance with the fiscal rule’s deficit ceiling by 2023,” Li said. He added strengthening public financial management and reforming state-owned enterprises would also help to mitigate fiscal risks.
Praising the monetary policy of the National Bank of Georgia, which he said was focused on ‘bringing down high inflation’, Li still warned that ‘given Georgia’s vulnerability to spillovers from the war in Ukraine,’ he expected inflation to increase and the current account deficit to widen.