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Georgia's financial sector leads in terms of share in net FDI

Finance Materials 30 June 2020 10:07 (UTC +04:00)
Georgia's financial sector leads in terms of share in net FDI

BAKU, Azerbaijan, June 30

By Tamilla Mammadova – Trend:

In 2019, Georgia's financial sector was leading in terms of share in net FDI inflows (20.6 percent), followed by energy sector (15.3 percent) and hotel and restaurants sector (12.4 percent), Trend reports referring to Policy and Management Consulting Group (PMCG), an international development consulting company primarily focused on transitional and developing countries.

The comparison of net FDI inflows in 2019 with the average net foreign direct investment (FDI) inflows of the three-year period of 2016-2018 reveals that the highest growing major sector in 2019 was hotels and restaurants (55 percent growth), followed by communications (42 percent growth) and mining (26 percent growth), said PMCG.

The sector which declined the most in 2019, compared to the average of 2016-2018, was real estate (124 percent decline), followed by transportation (83 percent decline) and construction (32 percent decline).

The analysis of top three sectors of net FDI inflows during the period of 2016-2019 again underlines the volatility of FDI flows in Georgia.

The analysis reveals a strong downward sloping trend for transport sector, with its share in total net FDI inflows decreasing from 34.9 percent in 2016 to 5.6 percent in 2019.

Conversely, there has been a strong upward sloping trend for financial sector over the period, as its share in total net FDI inflows nearly tripled from 7.5 percent in 2016 to 20.6 percent in 2019.

As for the energy sector, it also demonstrated an upward-sloping trend over the reporting period; however, it was less pronounced than that of financial sector. Its share in total net FDI inflows nearly doubled from 8.8 percent in 2016 to 15.3 percent in 2019.

It is worth noting that, based on World Bank data, Georgia is characterized with the highest figures of net FDI inflows as a percentage of GDP among Eastern Partnership (EaP) countries since 2016. Net FDI inflows in Georgia reached their peak of 11.7 percent in 2017, but decreased to 6.9 percent in 2018.

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