Issue 5, 2019. October-November


INVESTMENT NEWS provides a brief update on investments and changes in government policy that could impact the business environment.

Georgian Exports up 12% in January-August 2019
Exports were up 12.4 percent to $2.4 billion while imports decreased 4.4 percent to $5.7 billion - resulting in a trade deficit of $3.3 billion, or 40.6 percent of all trade turnover.

Georgia launches talks on US-Georgia direct flights
Georgian Minister of Economy Natia Turnava visited the US with an official delegation in mid-September to discuss the possibility of launching direct US-Georgia flights. Turnava and her delegation met with Delta and United Airlines.

Georgian GDP growth at 5.8% in August 2019
Georgial real GDP growth reached 5.8% in August 2019 in comparison to the same period last year. Particular growth was registered in construction, transport, trade, manufacturing and hosptaility.

Top trading partners in August 2019 - Turkey, Russia and Azerbaijan
Georgia's top three trading partners in January-August 2019 were Turkey ($1.14 billion), Russia ($903.9 million) and Azerbaijan ($682.5 million), Geostat reported in mid-September. Trade turnover with the EU decreased by 3.7 percent to $2 billion, while trade with the countries of the Commonwealth of Independent States (CIS) decreased 0.3 percent to $2.77 billion.

Georgia brings in $187 million in FDIs in Q2 2019
FDIs were down 53.7% in Q2 of 2019 to $187 million. Energy ($63.7 million), manufacturing ($38.4 million) and hotels and restaurants ($28.1 million) accounted for the major economic sectors of investment. The top three investing countries were the Netherlands (31.1%), Turkey (19.2%) and the United States (14.7%).

Georgian Wine Agency plans to spend 9 million GEL on advertising in 2020
The Georgian National Wine Agency says that it will spend about 9 million GEL ($3.04 million) on advertising and marketing events in 2020. This is a 1.5 million GEL increase in comparison to former budgets. The Chairman of the National Wine Agency Levan Mekhuzia says that more emphasis will likely be placed on northern European countries and Germany.

US allocating $1.2 million in aid for two critical humanitarian projects
The US government intends to allocate $1.2 million in funds to support two new projects. $500,000 will go towards supporting small business owners in villages near the occupation line in Georgia, while $700,000 will go towards the construction of a children's cancer treatment center in Tbilisi. The funds will be distributed through the Georgian Partnership Fund and USAID Georgia.

PM Gakharia announces hikes in pensions, state salaries for 2020
Pensions are set to rise by 50 GEL by July 1, 2020 while teachers' salaries will increase by 300 GEL ($101) for the 2020 school year, PM Gakharia announced in late August.
Law enforcement officers and soldiers are also set to receive an increase of at least 125 GEL ($41) in the coming year.
Meanwhile village doctors will receive an extra 100 GEl ($33) on top of their current salaries.
Kindergarten teachers can expect an additional 100 GEL as well.

Raw tobacco imports facing taxation
The Georgian government is considering placing taxes on the import of raw tobacco. Head of the Tobacco Control Alliance Giorgi Bakhturidze said in mid-September that the consumption of hand-rolled tobacco products has increased up to 23 percent in recent months since the imposition of higher taxes on cigarettes, which have grown almost five times since 2013.

Annual Privatisation goals already surpassed
Economy Minister Natia Turnava noted at the end of September that this year's target for income received from privatization was 60 million ($20 mln), but that this target had already been surpassed and reached 73 million ($24 million).
She said she expects this number to reach 100 million ($33 million) by the end of the year.

TRANSPORT, Real estate and hospitality lead growth in Q2 2019
The Georgian GDP grew 4.5% in Q2 of 2019, amounting to 11.03 billion GEL ($3.72 billion). Transport (17.9%), real estate (16.9%) and the hospitality business (14.1%) experienced the largest growth in the period, followed by utilities (11.5%), communications (10.8%) and healthcare and social work (9.3%). The largest shares of GDP by activity were as follows: trade (16.8%), industry (16.4%), transport (10.9%), construction (8.8%) and agriculture, hunting and forestry (8.4%).

Money transfers to Georgia surge 7.8% in August 2019
$146.4 million was transferred to Georgia in August 2019 - a 7.8 percent increase in comparison to the same figure for August 2018.
Almost 40 percent of the money transfers were sent from EU states, the equivalent of $55.89 million or 38.17 percent of all transfers.
$90.53 million was sent from other countries, accounting for the remaining 61.83 percent.
18 countries were responsible for 94 percent of all money transfers sent to Georgia, with Russia (24.22%), Italy (14.05%), the USA (10.33%), Greece (10.06%), Israel (9.57%) and Turkey (5.41%) being the top six sending countries.
More than $19 million was transferred to foreign countries in August 2019, 0.5% more than the same figure in August 2018.

Average salary in Q2 2019: 1,179 GEL ($389.5)
Average monthly earnings were up 76.3 GEL ($25.8) in Q2 of 2019 in comparison to the same period last year, amounting to an average of 1,179 GEL ($389.5).
Men continued to earn considerably more than women, making on average 1,419 GEL ($479), while women's average salaries hovered below 1000, at 913 GEL ($479).
Growth in women's earnings were also slower to rise in Q2 than were men's - rising just 69 GEL ($23) in comparison to men's 85.9 GEL ($29).
The highest salaries were to be had in the finance and insurance sector with 2,393 GEL ($808), scientific and technical professions - 1900 GEL ($641) and IT and communications - 1,806 GEL ($610).

Georgian MinFin starts talks on Tbilisi urban railway project
The Georgian Ministry of Finance intends to start negotiations with the European Bank for Reconstruction and Development and the European Investment Bank to look at launching the Tbilisi urban railway project, which would link Tbilisi with the large Georgian city of Rustavi and other suburbs.
The new railway would also connect to Tbilisi International Airport and Lilo Market, and would connect passengers at Samgori Metro Station.
The project cost is estimated at $200 million.

Ryanair enters Georgian market, Wizzair expands flight offers
Ryanair has announced it intends to begin flights from Georgia, with a route from Tbilisi to Milan Bergamo and two routes from Kutaisi to Bologna and Marseille.
The flights will begin in November. Later, a flight route will connect Tbilisi in Cologne starting in April 2020.
Ryanair expects to serve 170,000 customers annually with these flight options and create 100 'on-site' jobs in the country.
Meanwhile, lowcoster Wizz Air intends to add routes to Cologne and Bologna as well, and has increased flight frequency to Milan to four times a week.

Georgian national bank sells $40 mln to counter depreciation
The Natinoal Bank of Georgia sold $40 million at auction on September 27 to counter the depreciatian of the lari. Several days earlier on September 25, the NBG increased the refinancing rate to 7.5 per cent - up .5 percentage points.