Economic and Political Overview

flag Georgia Georgia: Economic and Political Overview

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline | COVID-19 Country Response

 

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Georgia is a transition economy influenced by its past affiliation to the Soviet Union. Economic growth in recent years was boosted by rising domestic and external demand, resulting in higher consumption, exports, tourism and remittances. Covid-19 halted demand growth while weighing on the burgeoning tourism industry in 2020, with GDP contracting by an estimated 6.2%. However, GDP rebounded 7.7% in 2021, fuelled by private consumption (75% of GDP) and expatriate remittances (estimated at 11% of GDP in 2021). The IMF forecasts a growth of 5.8% this year, followed by 5.5% in 2023.

General government debt, which had already shown an upward trend in recent years as a result of public infrastructure spending, expanded further in 2020, as the government stepped up social and capital spending as part of a Covid-19 response package. In 2021, the government managed to reduce the deficit to 3.3% of GDP thanks to an increase in revenue prompted by enhanced taxation. The deficit is forecast at 0.4% of GDP in 2022 before the budget turns positive the following year (+0.6%). Albeit relatively low, public debt is heavily denominated in foreign currency (42%). After increasing by more than half following the outbreak of the Covid-19 crisis, the debt-to-GDP ratio returned to a downward trend in 2021 (54.2%) and is expected to remain relatively stable over the forecast horizon. An increase in oil and food prices, coupled with a weak lari, pushed average inflation at 9% in 2021. In response, the National Bank of Georgia (NBG) hiked its policy rate by 100 basis points to 10.5% by the end of the same year. A tighter monetary policy should help bring inflation closer to the 3% target by 2023. Given Georgia’s small and open economy, the lari exchange rate remains very volatile, often eroding household purchasing power.

The Georgian unemployment rate rose rapidly in 2021, reaching 20.6% of the active population (GeoStat), its highest level since 2017. Prior to Covid-19, poverty had been almost halved as a result of social policies and economic growth (19.5% of the population was living below the national poverty line in 2019, according to the latest figures from GeoStat). Inequalities remain high compared to other economies in the region, with low levels of education, and a rural population (40.5% of the total – World Bank).

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 17.48e15.89e17.8519.6921.58
GDP (Constant Prices, Annual % Change) 5.0-6.27.75.85.5
GDP per Capita (USD) 4,694e4,275e4,8085,2985,804
General Government Balance (in % of GDP) -1.0-6.0e-3.3-0.40.6
General Government Gross Debt (in % of GDP) 40.460.054.253.652.1
Inflation Rate (%) 4.95.2e9.69.95.1
Unemployment Rate (% of the Labour Force) 17.6e18.50.00.00.0
Current Account (billions USD) -0.96-1.98e-1.78-1.50-1.34
Current Account (in % of GDP) -5.5-12.5-10.0-7.6-6.2

Source: IMF – World Economic Outlook Database , October 2021

Note: (e) Estimated Data

Main Sectors of Industry

Nearly 1.8 million Georgians, out of a population of 3.7 million, constitute the domestic labour force (World Bank) and the country possesses many natural resources on its territory. There are forests and woods, rivers and lakes, farmland, marble, minerals, manganese, iron, copper, coal, oil, clays, sand, as well as wildlife. The country has an agricultural tradition, which has helped develop Georgia's economy for years. However, the agricultural sector has been in decline since 1995. Agriculture now accounts for 7.4% of the GDP and employs 38.2% of the working population (World Bank). 98% of farmers are self-employed, and production is largely for self-consumption. More than 40% of Georgian territory is considered agricultural land, which also includes pastures and grasslands. The main agricultural products are cereals, technical plants, subtropical plants, fruit varieties, melons and gourds, tobacco and wine grapes, as well as rice, tea and cereals, tea and livestock. Georgia is also one of the oldest regions of wine producers and is rich in drinking water resources. The country has signed a Deep and Comprehensive Free Trade Area (CFTA) agreement with the EU, which implies that all Georgian agricultural products can be exported without duty to EU markets.

Following a decline during the break-up of the Soviet bloc, and again between 2004 and 2008, the industrial sector in Georgia has seen signs of modest recovery. The industry contributes 21.6% of the GDP and employs 14.3% of the working population (World Bank). The manufacturing sector accounts for 9.3% of GDP. The industrial sector includes mainly food processing and the manufacture of transportation equipment, electric motors, iron, steel, aircraft, chemicals and textiles. Mineral extraction concerns manganese (mainly in the Chiatura and Imeritia regions), copper, tungsten, marble and oil. Although Georgia has significant hydroelectric power generation capacity, it is heavily reliant on oil and gas imports. According to the latest data from Statistics Georgia, in the first nine months of 2021 total industry turnover stood at GEL 14.6 billion (compared to a full-year turnover of GEL 15.9 billion in 2020).

Services is the most dynamic subsector of the economy, accounting for 60.4% of Georgia's GDP and employing around 44.5% of the workforce (World Bank). The sector is boosted by the hotel, restaurant, transport and telecommunications industries. The tourism sector grew rapidly until Covid-19 (9.4 million visitors in 2019, 1.7 million in 2020 according to Georgian National Tourism Administration), and has become one of the government's priorities with the development of coastal infrastructures in the Adjara region and Svaneti ski resorts. Nevertheless, in 2021 tourism revenue accounted for only 38% of 2019’s revenue level (USD 1.24 billion), whereas the number of visitors went down by 80% (Georgia Tourism Administration).

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 38.2 14.3 47.6
Value Added (in % of GDP) 7.4 21.6 58.6
Value Added (Annual % Change) 3.6 -2.8 -7.8

Source: World Bank - Latest available data.

 

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Monetary Indicators 20162017201820192020
Georgian Lari (GEL) - Average Annual Exchange Rate For 1 MUR 0.070.070.070.080.08

Source: World Bank - Latest available data.

 
 

Find out all the exchange rates daily on our service Currency Converter.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
77,2/100
World Rank:
12
Regional Rank:
7

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 
 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Georgia is very open to international trade as it accounts for 93.3% of GDP in 2020 (down from 118.6% one year earlier - World Bank). The country has no foreign exchange controls, allows foreign investment in almost all sectors, and has an impressive privatization program, particularly in terms of land allocation. The main products exported in 2020 were copper ores and concentrates (23.3%), vehicles (12.1%), ferroalloys (7.4%), and wine (6.3%). The main imports were vehicles (9.7%), copper ores (7.2%), petroleum oils (6.2%), and medicaments (4.1% - data Comtrade).

Georgia's main customers were China (14.3% of total exports), Azerbaijan (13.2%), Russia (13.2%), Bulgaria (9.4%), and Ukraine (6.5%). Its main suppliers were Turkey (17.5% of total imports), Russia (11%), China (8.8%), the U.S. (6.9%), and Azerbaijan (6.4%). Georgia was the second former member of the Soviet Union to join the WTO. Free trade agreements with Europe and China help attract foreign investors. In 2014, Georgia signed an Association Agreement (AA) and a Comprehensive Free Trade Agreement (ALECA) with the European Union, which has strengthened its exports. The Georgian government is seeking to improve its ports on the Black Sea to boost East-West trade.

Georgia has a structural trade deficit due to the low diversity and value of exports. According to WTO, in 2020 merchandise exports amounted to USD 3 billion (-12% y-o-y), whereas imports reached USD 8 billion (-15.4% y-o-y). At the same time, exports of commercial services dropped by two-thirds to USD 1.5 billion, while imports of services amounted to USD 1.4 billion (-40.6%). The World Bank estimated Georgia’s trade deficit at 19.3% of GDP in 2020, up from a level of 8.9% one year earlier. Preliminary figures from Statistics Georgia show that in 2021 the country’s exports reached USD 4.2 billion,
26.9% higher vis-à-vis 2020. The top partners were China (USD 580.9 million), Russia (USD 555.0 million) and Turkey (USD 304.5 million), with copper ores and concentrates making up 26.1% of total exports.

 
Foreign Trade Indicators 20162017201820192020
Imports of Goods (million USD) 7,2367,9439,3629,5198,053
Exports of Goods (million USD) 2,1142,7363,3803,7983,343
Imports of Services (million USD) 1,7571,8982,1712,3601,401
Exports of Services (million USD) 3,3673,8924,3924,5101,503
Imports of Goods and Services (Annual % Change) 2.48.110.36.6-17.4
Exports of Goods and Services (Annual % Change) 8.711.710.19.8-38.2
Imports of Goods and Services (in % of GDP) 56.057.561.263.855.9
Exports of Goods and Services (in % of GDP) 40.846.550.654.837.4
Trade Balance (million USD) -3,883-3,809-4,116-3,736-3,139
Trade Balance (Including Service) (million USD) -2,306-1,785-1,872-1,561-3,009
Foreign Trade (in % of GDP) 96.8104.0111.8118.693.3

Source: WTO – World Trade Organisation ; World Bank , Latest Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2020
China 14.3%
Azerbaijan 13.2%
Russia 13.2%
Bulgaria 9.4%
Ukraine 6.5%
See More Countries 43.5%
Main Suppliers
(% of Imports)
2020
Turkey 17.5%
Russia 11.0%
China 8.8%
United States 6.9%
Azerbaijan 6.4%
See More Countries 49.4%

Source: Comtrade, Latest Available Data

 
 

Main Products

3.3 bn USD of products exported in 2020
Copper ores and concentratesCopper ores and concentrates 23.3%
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 12.1%
Ferro-alloysFerro-alloys 7.4%
Wine of fresh grapes, incl. fortified wines; grape...Wine of fresh grapes, incl. fortified wines; grape must, partly fermented and of an actual alcoholic strength of > 0,5% vol or grape must with added alcohol of an actual alcoholic strength of > 0,5% vol 6.3%
Undenatured ethyl alcohol of an alcoholic strength...Undenatured ethyl alcohol of an alcoholic strength by volume of < 80%; spirits, liqueurs and other spirituous beverages (excl. compound alcoholic preparations of a kind used for the manufacture of beverages) 4.0%
See More Products 47.0%
8.1 bn USD of products imported in 2020
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 9.7%
Copper ores and concentratesCopper ores and concentrates 7.2%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 6.2%
Medicaments consisting of mixed or unmixed...Medicaments consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses incl. those in the form of transdermal administration or in forms or packings for retail sale (excl. goods of heading 3002, 3005 or 3006) 4.1%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 3.9%
See More Products 68.9%

Source: Comtrade, Latest Available Data

 
 

To go further, check out our service Import Export Flows.

 
 

Main Services

4.5 bn USD of services exported in 2018
71.88%
21.61%
2.20%
1.12%
1.10%
0.91%
0.44%
0.38%
0.25%
0.10%
0.01%
2.2 bn USD of services imported in 2018
56.06%
23.42%
5.95%
4.18%
3.35%
2.07%
1.73%
1.21%
0.96%
0.64%
0.44%

Source: United Nations Statistics Division, Latest Available Data

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Political Outline

Current Political Leaders
President: Salome ZOURABICHVILI (since 16 December 2018)
Prime Minister: Irakli GARIBASHVILI (since 22 February 2021)
Next Election Dates
Presidential: 2024
Parliamentary: October 2024
Main Political Parties
Georgia has a multi-party system. The major political parties are:
- Georgian Dream (coalition comprising of Democratic Georgia; Conservative Party; Industry Will Save Georgia; Republican Party of Georgia; National Forum): nationalist, pro-market, pro-west, diverse
- United National Movement (UNM): centre-right, largest opposition force, favors radical reforms and close ties with NATO and the European Union
- Free Democrats: liberal, centre, pro-European

Other parties include:

- Alliance of Patriots
- European Georgia
- Lelo
- Strategy
- Girchi
- Citizens
- Labor

Type of State
Parliamentary democracy
Executive Power
The head of the state is the President who is elected by a popular vote for a five-year term. The President is the commander-in-chief of the armed forces and holds executive powers. The President is also the head of the Ministries of Energy and State Security; while the Prime Minister is the head of the remaining ministries. The President appoints the Cabinet of Ministers. The Georgian state is highly centralized, except for the two autonomous regions of Abkhazia and Ajara which have had special autonomous powers since Soviet rule.
Legislative Power
The legislature in Georgia is unicameral, consisting of the Supreme Council (commonly referred to as Parliament), with its 235 members elected by popular vote to serve four-year terms. The government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. The president cannot directly dissolve the parliament or veto its enactments without taking parliament into his confidence.
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
60/180

Source: World Press Freedom Index, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Partly Free
Political Freedom:
4/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

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COVID-19 Country Response

COVID-19 epidemic evolution
To find out about the latest status of the COVID-19 pandemic evolution and the most up-to-date statistics on the COVID-19 disease in Georgia, you can visit the country´s official website : Prevention of coronavirus spread in Georgia.
For the international outlook you can consult the latest situation reports published by the World Health Organisation as well as the global daily statistics on the coronavirus pandemic evolution including data on confirmed cases and deaths by country.
Sanitary measures
To discover the latest public health situation in Georgia and the current sanitary measures in vigour, you can consult the latest publications on the government´s official website. 
To have the up-to-date information on the containment measures put in place and public health recommendations please visit the website of the Ministry of Health
Travel restrictions
The COVID-19 situation, including the spread of new variants, evolves rapidly and differs from country to country. All travelers need to pay close attention to the conditions at their destination before traveling. Regularly updated information for all countries with regards to Covid-19 related travel restrictions in place including entry regulations, flight bans, test requirements and quarantine is available on TravelDoc Infopage.
It is also highly recommended to consult COVID-19 Travel Regulations Map provided and updated on the daily basis by IATA.
The US government website of Centers of Disease Control and Prevention provides COVID-19 Travel Recommendations by Destination.

The UK Foreign travel advice also provides travelling abroad advice for all countries, including the latest information on coronavirus, safety and security, entry requirements and travel warnings.
Import & export restrictions
For the information on all the measures applicable to movement of goods during the period of sanitary emergency due to the COVID-19 outbreak (including eventual restrictions on imports and exports, if applicable), please consult the website of the Georgian Customs.  
Georgia has for instance implemented temporary export restrictions on certain categories of critical medical supplies in response to COVID-19.
For a general overview of trade restrictions due to COVID-19 pandemic, please consult the section dedicated to Georgia on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
Most of the economic measures taken by the Georgian government to address the impact of the COVID-19 pandemic on the national economy are available in the Anti-Crisis Economic Plan
For the general overview of the key economic policy responses to the COVID-19 outbreak (fiscal, monetary and macroeconomic) taken by the Georgian government to limit the socio-economic impact of the COVID-19 pandemic, please consult the section dedicated to Georgia in the IMF’s Policy Tracker platform.
Support plan for businesses
The country's government official sources do not provide yet information with regards to specific schemes in support of business or exporting companies following the coronavirus epidemic outbreak. For the updated information please visit the website of the Ministry of economy and sustainable development of Georgia.
 For a general overview of international SME support policy responses to the COVID-19 outbreak refer to the World Bank's Map of SME-Support Measures in Response to COVID-19.
Support plan for exporters
The country's government official sources do not provide yet information with regards to specific schemes in support of business or exporting companies following the coronavirus epidemic outbreak. For the updated information please visit the website of the Ministry of economy and sustainable development of Georgia.
 

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Latest Update: July 2022