Newsletter Issue 34 | May – June 2020

Georgia’s economic situation in light of COVID-19

Georgia will be severely hit by the COVID-19 pandemic. While economic fundamentals were good going prior to the crisis, forecasts now show a strong deterioration. Most visibly, real GDP growth is expected to change its sign, from a previous forecast of +4.3% to -4.0%.


Economic Monitor Issue 12 | June 2020


  • GDP to drop by 4.0% in 2020; pre-COVID forecast: +4.3%
  • Consumption to drop heavily, also due to much lower remittances (Apr: -42.3%)
  • Exports to contract by 24%; but effect exaggerated due to re-exports of cars and copper
  • Tourists revenues strongly affected; perspective for Jul/Aug still not clear
  • Current account deficit to reach 11.3% of GDP; pre-COVID forecast: 5.3%
  • Exchange rate at ca. 3.0 GEL/USD; sizeable depreciation in March followed by appreciation
  • NBG’s policy rate at 8.5%; limited room for reduction due to higher-than-target inflation risks
  • Government reacted to crisis with strong anticyclical fiscal measures
  • As a result, budget deficit will amount to 8.5% of GDP in 2020; pre-COVID plan: 2.4%
  • IMF programme augmented by USD 325 m, incl. USD 200 m for budget support

Newsletter Issue 33 | March – April 2020

Agro-exports to the EU: volumes, transport and logistics

Production volumes, as well as barriers in transport and logistics, play a key role in constraining agro-food exports from Georgia to the European Union. These challenges can be addressed by focusing on increasing exports through foreign direct investment and by accelerating exports of existing producers; by providing critical logistics infrastructure, including an airport cargo terminal in Kutaisi; by stimulating domestic demand for quality logistics; and by bundling interests and closing information gaps.


Newsletter Issue 32 | January – February 2020

Strong economic growth despite Russian sanctions

In spite of the Russian sanctions, Georgia’s economic growth was high reaching 5.2% in 2019. The successful absorption of this external shock demonstrates the strong resilience of the Georgian economy, which will grow by more than 4% also in 2020.


Economic Monitor Issue 11 | January 2020


  • Agro-food exports: The role of transport and logistics sector
  • DCFTA: Sectoral analysis reveals sizeable DCFTA effect on EU exports to Georgia
  • Banking sector: Georgian banking sector on a more stable footing
  • Capital markets: Georgian capital markets remain underdeveloped

Newsletter Issue 31 | November – December 2019

Georgia’s financial system on a more stable footing

Over the past year excessively rapid growth of household lending has been successfully reined in, and aggressive lending practices of microfinance institutions have been banned. The high level of dollarisation and excessive debt of households remain vulnerabilities of the financial system and constrain monetary and exchange rate policy. The National Bank has made good progress in developing a regulatory framework for capital markets. The pensions fund became operational in 2019 and may support liquidity in local markets.


Policy Briefing 07/2019

Export opportunities for Georgia generated by the membership in the PEM Convention

Part 1: opportunities for intensified exports of intermediate products


Newsletter Issue 30 | September – October 2019

Startups in Tbilisi: what is needed to accelerate their development?

In recent years, Tbilisi has begun to develop a startup sector. There now are more than 100 small companies, working to develop scalable solutions for problems in Georgia and beyond. Many of these startups are supported by the government through a targeted programme. Several startups have international ambitions, and some founders have gone to highly regarded incubator programmes in Europe or the United States.


Newsletter Issue 29 | Juli – August 2019

Georgia’s macroeconomic situation in light of Russian sanctions

On 21 June, Russia announced a ban of direct flights to/from Georgia. The ban will not only have a strong impact on the tourist industry, but will also affect the macroeconomic situation, given the importance of tourism for the Georgian economy.
The estimated impact of Russian sanctions on GDP amounts to 1 percentage point. As a result, we expect a slowdown in real GDP growth from 4.7% in 2018 to 3.6% in 2019. Expectedly, the Georgian Lari has come under pressure: since 21 June, the Lari depreciated by about 4.5% against the US dollar.


Newsletter Issue 28 | May – June 2019

The effect of the DCFTA on Georgian exports to the EU

Georgia and the EU established a deep and comprehensive free trade area (DCFTA), which came into force in 2014. In a recent comparative study, which also includes Ukraine and Moldova, we look at the effect of the DCFTA on Georgian exports to the EU.
Between 2013 and 2018, exports to the EU – as defined in our study – increased by a rather moderate 9% in US dollar terms. However, in the same period prices for key Georgian export products declined heavily. In real terms, i.e. using constant prices of 2013, Georgian exports to the EU increased by 115%. Having said that, the EU was not able to increase its share as an export destination for Georgian products: the share remained flat at 16%. All in all, we conclude that the DCFTA had a positive, but moderate effect on Georgian exports to the EU.


Newsletter Issue 27 | March – April 2019

Reduction of Georgia’s current account deficit: a new trend?

Traditionally, Georgia has a high current account deficit, which averaged 13% of GDP between 2007 and 2016. This has caused some concern, as it makes the country vulnerable to external shocks. However, in the last two years, Georgia’s current account deficit has been declining, standing at “only” 7.7% of GDP in 2018.
This positive development has come mostly on the back of an increase in exports of services, which is the result of a booming tourism sector. Moreover, remittances have been strong, reaching record Levels of about USD 1.6 bn in 2018.


Newsletter Issue 26 | January – February 2019

Export potential of Georgian agro-food products in the EU market

With 29%, agro-food products make up for a significant share of Georgian exports. Despite having a free trade agreement with the EU, however, Georgian agro-food exports to the EU underperform. About 2/3 of all agro-food exports go to the CIS region. In terms of dynamics, exports to the CIS surged by 43% in 2018, whereas exports to the EU market only increased by 14%.


Technical Note 02/2019

Export potential of Georgia’s agro-food sector on other non-CIS markets: top-10 destinations for each of selected top-20 products


Technical Note 01/2019

Export potential of Georgia’s agro-food sector on the EU market: top-10 destinations for each of selected top-20 products


Economic Monitor Issue 9 | January 2019


  • Presidential elections. New President has been elected
  • Banking. Measures to curb household debt
  • Turkey. So far only moderate effect of depreciation of Turkish Lira on Georgia
  • Pension reform. Start on 1 January 2019

Newsletter Issue No. 25 | November – December 2018

Slowdown of economic growth

The overall macroeconomic situation in Georgia re-mains stable. Economic growth amounted to 5.4% in the first half of 2018. However, a slowdown took place in the second half of the year, which will con-tinue in 2019. As a result, Georgia will grow at a moderate rate of 4.6% in 2019.


Newsletter Issue No. 24 | September – October 2018

Turkish Lira depreciation: moderate effect on Georgia

From January to August 2018, the Turkish Lira depre-ciated by 42% against the Georgian Lari, raising con-cerns about the ability of the Georgian economy to withstand the pressure, given extensive economic links between the countries.


Newsletter Issue No. 23 | July – August 2018

Economic relevance of crypto-mining in Georgia

Georgia is one of the leading producers (“miners”) of cryptocurrencies worldwide. Despite this fact, little is known about the relevance of crypto-mining for the Georgian economy. Official statistics fail to properly record the mining activity, which to a large extent takes place in free industrial zones.


Newsletter Issue No. 22 | May – June 2018

Georgia in mid-2018: positive economic trend continues

In 2017, the Georgian economy developed well. By mid-2018 we observe a continuation of this trend. GDP increased by 5.0% in 2017 and in the period of January-April 2018 growth even accelerated to 5.5%. Economic growth is broad based – whereas agricul-ture is the only exception with a decline in 2017.


Economic Monitor Issue 8 | June 2018


  • Mining of cryptocurrencies. Own estimation of contribution to GDP
  • Mid-term fiscal plan. Higher public investment combined with a lower budget deficit
  • Banking sector. Stability and concentration
  • De-dollarisation. Partial success in 2017

Newsletter Issue No. 21 | March – April 2018

Banking sector: good performance, but challenges remain

Georgia’s banking sector has served well the needs of a growing economy. The ratio of banking sector assets to GDP has steadily grown and the ratio of credit to the real sector is high in comparison to other countries in the region. The sector stands out for the concentration of assets in the three largest banks which may give rise to concerns about competition in the sector and non-banking activities by the owners of these banks. The two largest banks are listed on the London Stock Exchange and therefore comply with high governance standards. Unlike in many other countries in the emerging Europe region, the Georgian banking sector has not experienced any major instability in recent years. Bank liquidity and capital coverage are very high and should provide ample buffers to withstand future shocks. The authorities have rightly developed a strategy of dedollarisation, based on a monetary regime that targets inflation. There is a need to expand the capital markets which could offer funding at longer maturities in the local currency.


Newsletter Issue No. 20 | January – February 2018

Georgian economy outperformed expectations in 2017

The Georgian economy develops positively. GDP grew by 4.3% in 2017 and is expected to continue with similar speed in 2018. Economic growth occurred on a broad base: It has been supported by consumption, investment and exports.


Economic Monitor Issue 7 | January 2018


  • Inventory write-offs. State should allow enterprises to write off actual losses; verification by plausibility checks founded on databases
  • Remittances. Increase by 20% in Jan-Sep 2017 supports private consumption
  • Doing Business Ranking. Improvement from rank 16 to rank 9
  • Capital market development in the context of the DCFTA. Possibility for larger enterprises to mobilise capital
  • Introduction of capital-funded pensions. Successful introduction of capital-based pensions only in case of simultaneous reform of the 1. pension pillar

Economic Monitor Issue No. 6 | June 2017


  • New IMF programme signed. Important stability signal for investors
  • GET Georgia recommends economic policy priorities. Comprehensive package of measures by all relevant government departments is needed
  • Unlocking the export potential of Georgian agriculture. Land consolidation and productive alliances can help exploit the export potential
  • DCFTA implementation in Georgia. Implementation mostly on track