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Export volume to Georgia increases

Business Materials 13 September 2019 13:34 (UTC +04:00)

Baku, Azerbaijan, September 13

By Tamilla Mammadova – Trend:

Exports to Georgia has increased, but the current account position has been persistently negative, Trend reports referring to the report of European Investment Bank (EIB).

Export activities hovered around 30 percent of GDP until 2009, but have increased since then to reach around 55 percent of GDP in 2018. At the same time, imports of goods and services have been historically large at 50-55 percent of GDP reaching 67 percent of GDP in 2018.

Trade, industry, construction and real estate activities, and transport, communication and the agricultural sector represent the lion’s share of the Georgian economy. Notably, tourism has been booming, with numbers of international travelers reaching 8.7 million in 2018, scoring a 10-percent increase year-on-year.

This has positively spilled over to several segments of the economy, including trade and industry. All in all, international trade, tourism and remittances are key sources of foreign currency revenue, like in other countries in the region. Public and private construction and related real estate activities are drivers of growth. The agricultural sector remains inefficient. It represents 6.7 percent of GDP and 8 percent of valued added. Nevertheless, it accounts for around 50 percent of total employment.

Nevertheless, the agricultural sector is also a contributor to Georgian exports. The main export products were nuts, wine, mineral waters and alcoholic spirits. For example, Georgia is among the world’s top five producers of hazelnuts, along with Turkey, Italy, US and Azerbaijan, the bank said.

This has generated a persistent imbalance in the Georgian economy’s external position, mirrored by a current account deficit frequently above 10 percent of GDP over the last decade.

In 2018, the current account deficit stood at roughly 8 percent of GDP. This was largely driven by a negative trade balance. Trade in the services sector recorded a surplus, thus offsetting the goods’ trade deficit. As of the beginning of 2019, Georgia’s top trading partners were neighboring countries: Russia (16.1 percent), Azerbaijan (11.6 percent), Turkey (7.8 percent) and Ukraine (7.7 percent), said the report.

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