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 trade up 19% in January-May 2023
Georgian external trade turnover amounted to $8.36 billion in January-May 2023, posting a 19% YoY increase, Geostat revealed in a mid-June report. The value of exports rose by 18.5% and equaled $2.5 billion, while imports also grew by 19%, amounting to $5.85 billion in the first five months of 2023. The trade deficit, which measures the negative balance of trade in which imports exceed exports, reached $3.35 billion, and the share of trade turnover hit 40%, the report revealed.
These figures come on the back of what Deputy Minister of Economy Genadi Arveladze described as a “record increase” of trade turnover in 2022. In his speech in front of the Georgian Parliament on June 24, the minister noted that turnover last year increased by 34% and amounted to $19.2 billion, including a 32% increase in exports valued at $5.6 billion.
He noted the development of trade regimes with other countries was “one of the important successes” in this direction, highlighting the free trade agreement with the European Union signed in 2014, as well as agreements with the European Free Trade Association, China, Hong Kong, the United Kingdom, and the United Arab Emirates.
“Georgian products can enter one-third of the world consumer market under free trade regimes, which represents a 2.3 billion consumer market,” the deputy minister said, adding that the share of Georgia’s export dependence on CIS markets had decreased in recent years.
Galt & Taggart: annual tourism revenue expected to reach $4 billion in 2023
Galt & Taggart’s latest forecasts foresee the country’s annual tourism revenue reaching $4 billion in 2023, economist Lasha Kavtaradze confirmed to BM.ge on June 17.
Clarifying that migrants who have become residents are excluded from these figures, Kavtaradze added that tourism revenues from July and August alone were expected to reach a record $1 billion this year. In the first quarter of 2023, 1.2 million international non-resident travelers entered Georgia, which is twice the size of the figure from the same period of last year, Kavtaradze told the media outlet. He also noted tourism revenue had increased by 18% compared to the same period last year.
“Between January-May 2023, Georgia’s income from international tourism amounted to $1.35 billion,” said Kavtaradze, adding that tourism revenue amounted to $250 million in April and $304 million in May.
Georgian government adopts ADB-supported Capital Market Development Strategy
The Government of Georgia presented a Capital Market Development Strategy developed in tandem with the Asian Development Bank (ADB) in late June. The strategy will serve as a guide for “coordinated and consistent” development of the Georgian capital market, Officer-in-Charge of the ADB Georgia Resident Mission Kamel Bouhmad said. “We are pleased to continue supporting the government’s efforts to deepen local capital markets, enhance market efficiency, mobilize investment opportunities, and promote sustainable economic growth. By leveraging our technical expertise, financial resources, and international network, we aim to continue to be a key partner for Georgia as it endeavors to strengthen its capital market.”
Plans for new Tbilisi airport announced
Georgian Prime Minister Irakli Garibashvili on June 5 unveiled his office’s plans to build a “new, modern, and international-standard airport,” which he said would respond to the government’s intentions of transforming the country into a regional transportation hub.
In comments made at his weekly cabinet meeting, the head of the government said that “disadvantages and limitations” of Tbilisi International Airport were growing more apparent as tourist traffic continues to increase. The PM said the location of a former airfield in Vaziani, near Tbilisi, may become the site of the new airport, and added the government plans to conduct a feasibility study on the prospective area and its potential. “The final decision about the location of the new airport will be made after professional assessments of the former airfield are completed,” he added.
Headline inflation down at 1.5% in May
Headline CPI retreated to 1.5% from 2.7% inflation May, data published by Geostat in early June shows. This decline was primarily attributed to a reduction in inflation for imported goods (-6.5% YoY) and mixed goods (-4.2% YoY). Domestic inflation also slowed to 9.1% in May compared to 10.6% in April.
Prices of certain food products and non-alcoholic beverages decreased MoM in Georgia in May, while prices of alcoholic beverages, tobacco, miscellaneous goods and services increased. Prices for food products, including oil, vegetables, milk and bread, decreased by 1.7%. At the same time, prices increased for: fruit (+ 4%); coffee, tea, and cocoa (+1.5%); fish (+1%); and meat (+1 %).
The National Bank of Georgia said at the end of May that even though domestic inflation was still high in the country, the trends were following a “downward trajectory,” with figures expected to remain below their target level in the second half of the year.
Georgia, Germany sign €1.3 million green hydrogen deal
The German government will allocate €1.3 million through the German Development Bank to support the introduction of green hydrogen technology in Georgia, the Georgian Ministry of Economy announced on June 20. Georgian Deputy Economy Minister Romeo Mikautadze commented: “We are not only studying the possibility of introducing [this] technological innovation in the country and being introduced to successful examples, but also starting a pilot project.” The Ministry of Economy said preparatory work would determine the technical and economic feasibility, design, environmental impact, and related legislation necessary for the implementation of the technology. The ministry also said the two countries had agreed to jointly develop both a green hydrogen pilot plant and its “full value chain.”
Bakuriani, Gudauri ski resorts set as permanent hosts for international competitions
Georgia’s popular ski resorts of Bakuriani and Gudauri have been marked as permanent hosts in the competition calendar of the International Ski and Snowboard Federation, enabling the destinations to host stages of World Cup events running under the body annually. The Mountain Trails Agency of Georgia announced in early June that the two locations would be among 11 resorts around the world hosting 19 events of the 2023-2024 FIS Ski Cross World Cup calendar.
Bakuriani will host competitions for mogul, dual mogul, and ski cross disciplines, while Gudauri will be the destination for snowboard cross events. A FIS press release named Bakuriani as an “emerging ski destination” that offers a “distinctive setting and a demanding course that showcases the region’s natural beauty.”
Georgian Deputy Economy Minister Mariam Kvrivishvili says the new development means the country has become a permanent host of FIS competitions for the first time in its history. “Our country has taken a proud spot among many successful and developed ski resorts in France, Switzerland, the United States and Canada […] This success was determined by two main factors: the first is the very successfully held World Championships – which our country hosted at the beginning of this year – and the second is infrastructural readiness,” Kvrivishvili said.
She added ski infrastructure of “historic” importance had been set up in Bakuriani over the past two years, including two reservoirs for an artificial snowmaking system, three new cable cars, 11 ski tracks and a 34-kilometer snowmaking system. Kvrivishvili said the FIS decision to grant the status to the two Georgian destinations would “significantly contribute” to the strengthening and promotion of mountain ski tourism in the country.
$382 million infrastructure program launches around Georgia
The Municipal Development Fund of Georgia on June 29 announced the launch of a ₾1 billion ($382 million), five-year program for the renovation and development of infrastructure in 11 locations across the country.
The renovation projects will take place in Borjomi, Bakuriani, Kutaisi, Tskaltubo, Telavi, Zugdidi, Batumi, Mtskheta, Stepantsminda, Mestia, and Kazbegi, and include: the central park and historical center of the central-western city of Borjomi; the central park and new recreational area at Tsivi Lake in the western spa resort of Tskaltubo; the main boulevard in the western city of Zugdidi; the botanical garden and Lado Meskhishvili Theatre in the western city of Kutaisi; Batoni Castle and its surrounding area as well as Vazha-Pshavela Drama Theatre in the eastern city of Telavi; the old town on the Black Sea coastal city of Batumi; and various historical areas within the Kazbegi, Bakuriani, and Mestia municipalities.
This new program follows a similar urban development initiative launched two years ago, which included 63 municipalities in Georgia and upgraded city centers around the country. The total cost of the previous program was ₾500 million ($191 million).
Asian Development Bank invests $7.6 million in EVs, charging network
The Asian Development Bank (ADB) on July 5 announced it would allocate ₾20 million ($7.6 million) towards the deployment of zero-emission light, road, and non-road electric vehicles, and expansion of charging networks in Georgia with 70 new stations. The money will be invested in inaugural two-year and six-month lari-denominated green bonds of Tegeta Motors, one of Georgia’s leading automotive companies, the ADB said.
“The ADB is Asia and the Pacific’s climate bank, and this investment builds on our commitment to developing Georgia’s capital markets through our climate and gender bond issuance,” ADB Director General for Private Sector Operations Suzanne Gaboury said. Tegeta Executive Director Vakhtang Kacharava said the company was “dedicated to pioneering” the issuance of green bonds in Georgia to support domestic efforts to reduce greenhouse gas emissions.