Economy of Georgia (country)

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Economy of Georgia

Top: Batumi, the financial centre of Georgia

Bottom: Tbilisi, capital of Georgia

Currency Georgian lari (GEL)

Fiscal year 1 January – 31 December

Trade organisations WTO, GUAM, BSEC and others

Country group Developing/Emerging[1]

Upper-middle income economy[2]

Statistics

Population  3,716,858 (1 January 2020)[3]

GDP  $18.7 billion (nominal, 2021 est.)[4]

 $63.04 billion (PPP, 2021 est.)[5]

GDP rank 124th (nominal, 2021)

110th (PPP, 2021)

GDP growth 4.8% (2018) 5.1% (2019e)
 −6.8% (2020f) 10.4% (2021f)[6]
GDP per capita  $5,015 (nominal, 2021 est.)[4]

 $16,910 (PPP, 2021 est.)[4]

GDP per capita rank 102th (nominal, 2021)

78th (PPP, 2021)

GDP by sector Industry – 24.6%

Trade – 12.4%

Construction – 11.3%

Transport & Communication – 9.5%

Agriculture – 8.1%

Other activities – 34.1%

(2015)[7]
Inflation (CPI) 4.6% (2020 est.)[5]
Population  20.1% (2018)[8]
below poverty line
 40.3% on less than $5.50/day (2020f)[9]
Gini coefficient  36.4 medium (2018, World Bank)[10]
Human Development  0.802 very high (2021)[11] (63rd)
Index
 0.706 high IHDI (2021)[12]
Labour force  2,011,755 (2019)[13]

 55.8% employment rate (2018)[14]

Labour force by agriculture: 8.2%
occupation
industry: 23.7%

services: 67.9%

(2017 est.)[15]

Unemployment  19% (2022)[16]

Average gross salary GEL 1,463 / €444 / $482 monthly (2021*)[17]

Average net salary GEL 1,170 / €355 / $385 monthly (2021*)[17]

Main industries steel, machine tools, electrical appliances, mining

(manganese, copper, gold), chemicals, wood products, wine

Ease-of-doing-  7th (very easy, 2020)[18][19]
business rank

External

Exports  $3.8 billion (2019)[20]

Export goods vehicles, ferro-alloys, fertilizers, nuts, scrap metal, gold,

copper ores
Main export partners  Azerbaijan 13.4%
  Russia 13.1%

 Armenia 11.4%

 Bulgaria 7.5%

 Ukraine 6.6%

 China 5.9%

 Turkey 5.3%

 Romania 4.7%

 United States 3.5%

 Israel 2.9%

(2019)[20]

Imports  $9.5 billion (2019)[20]

Import goods fuels, vehicles, machinery and parts, grain and other foods,

pharmaceuticals
Main import partners  Turkey 17%

 Russia 10.3%

 China 9%

 United States 7.1%

 Azerbaijan 5.9%

 Germany 5.3%

 Ukraine 4.4%

 Armenia 2.8%

 Japan 2.7%

 Italy 2.4%

(2019)[20]
FDI stock  $17.47 billion (31 December 2017 est.)[15]

 Abroad: $2.477 billion (31 December 2017 est.)[15]

Current account  −$1.348 billion (2017 est.)[15]
Gross external debt  $16.99 billion (31 December 2017 est.)[15]

Public finances
Public debt  44.9% of GDP (2017 est.)[15][note 1]
Budget balance −3.8% (of GDP) (2017 est.)[15]

Revenues 4.352 billion (2017 est.)[15]

Expenses 4.925 billion (2017 est.)[15]

Economic aid ODA $626.0 million USD (2010)

Credit rating Standard & Poor's:[21]
 BB- (Domestic)

BB- (Foreign)

BB (T&C Assessment)

Outlook: Stable[22]

Moody's:[23]

Ba3

Outlook: Stable

Fitch:[24]

BB-

Outlook: Stable

Scope:[25]

BB

Outlook: Stable
Foreign reserves  $3.039 billion (31 December 2017 est.)[15]

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars.

The economy of Georgia is an emerging free market economy. Its gross domestic

product fell sharply following the dissolution of the Soviet Union but recovered in the
mid-2000s, growing in double digits thanks to the economic and democratic reforms
brought by the peaceful Rose Revolution. Georgia continued its economic progress
since, "moving from a near-failed state in 2003 to a relatively well-functioning market
economy in 2014".[26] In 2007, the World Bank named Georgia the World's number one
economic reformer,[27] and has consistently ranked the country at the top of its ease of
doing business index.
Georgia's economy is supported by a relatively free and transparent atmosphere in the
country. According to Transparency International's 2018 report, Georgia is the
least corrupt nation in the Black Sea region, outperforming all of its immediate
neighbors, as well as nearby European Union states.[28] With a mixed news
media environment, Georgia is also the only country in its immediate neighborhood
where the press is not deemed unfree.[29]
Since 2014, Georgia is part of the European Union's Free Trade Area, with the EU
continuing to be the country's largest trading partner, accounting for over a quarter of
Georgia's total trade turnover.[30] Following the EU trade pact, 2015 was marked by
further increase in bilateral trade, whereas trade with the Commonwealth of
Independent States (CIS) decreased precipitously.[31]

Contents

 1History
 2Recent macroeconomic performance
 3Foreign direct investment in Georgia
 4Trade
 5International money transfers
 6Institutional reforms
o 6.1Licensing regulation
o 6.2Tax collection
o 6.3Labour regulation
o 6.4Judicial procedure
 7Unemployment
 8Structure of the economy
o 8.1Energy
o 8.2Agriculture
o 8.3Tourism
o 8.4Logistics
o 8.5Finance
 9Human Development Index of Georgia
 10See also
 11Further reading
 12Notes
 13References
 14External links

History[edit]
Before the 20th century Georgia had a largely agrarian economy.
Georgia's modern economy has traditionally revolved around Black Sea tourism,
cultivation of citrus fruits, tea and grapes; mining of manganese and copper; and the
output of a large industrial sector producing wine, metals, machinery, chemicals, and
textiles.
Like many post-Soviet countries, Georgia went through a period of sharp economic
decline during the 1990s, with high inflation and large budget-deficits, due to
persistent tax evasion.[citation needed] In 1996 Georgia's budget deficit rose to as much as 6.2%.
During that period international financial institutions played a critical role in Georgia's
budgetary calculations. Multilateral and bilateral grants and loans totaled 116.4 million
lari in 1997; they totaled 182.8 million lari in 1998.
Economic recovery had been hampered by the separatist disputes
in Abkhazia and South Ossetia, resistance to reform on the part of some corrupt and
reactionary factions,[citation needed] and the Asian financial crisis of 1997. Under
the leadership of President Shevardnadze (in office 1995–2003), the government
nonetheless made some progress on basic market reforms: it liberalized all prices and
most trade, introduced a stable national currency (the lari), and massively downsized
government.
During the late 1990s more than 10,500 small enterprises had been privatized, and
although privatization of medium- and large-sized firms had been slow, more than 1,200
medium – and large-sized companies had been set up as joint stock companies. A law
and a decree establishing the legal basis and procedures for state property privatization
reduced the number of companies controlled by the state.
The United States began assisting Georgia in the process of reform soon after the
country gained independence from the Soviet Union. Gradually, the focus shifted from
humanitarian to technical and institution-building programs. Provision of legal and
technical advisors was complemented by training opportunities for parliamentarians, law
enforcement officials, and economic advisers.

Recent macroeconomic performance[edit]

Over the last few years Georgian economy has been one of the fastest in the FSU.
Since 2003's Rose Revolution, the new Government of Georgia implemented broad and
comprehensive reforms, that touched every aspect of the country's life. Economic
reforms were addressed to liberalization of the economy and provision of sustainable
economic growth, based on the private sector development. Establishment of an
attractive business environment led to significant inflow of Foreign Direct Investment in
the country, facilitating high economic growth rates.
In 2013, Georgia ranked in the top ten countries in the Emerging Market Energy
Security Growth Prosperity Index,[32] according to an article published by CISTRAN
Finance news. The index identifies emerging nations that have strong growth potential
based on energy reserves and GDP.[33]
Following reforms, Georgia's economy successfully diversified and began showing rapid
upward growth, averaging over 10% annual real GDP growth from 2004–2007, peaking
at 12.3 percent in 2007. Overall, from 2004-2007, the economy of Georgia expanded by
35%.[34]
Georgia's economic liberalization policy demonstrated some resilience to external
shocks – war with Russia in 2008 and the global financial crisis. Despite this, in 2008
Georgia economy grew by 2.3%. After contracting in 2009 (−3.8%), the economy
recovered soon after, growing 6.3% in 2010 and 7.0% in 2011. The unemployment
rate shrunk from 16.9% to 16.3% between 2009 and 2010. [34]
In 2013 the annual inflation rate in Georgia equaled 2.4%. [35] It has been decreased
significantly after 11.2% in 2010.[36] Growth of inflation rate was the result of increasing
food prices in the world and essential share of the inflation fluctuations came on
variability of food prices, as far as the share of food is relatively high in consumer
basket of Georgia.
In 2011, IMF estimated current account balance of Georgia was −1.489 BN USD.
[37]
 Georgia has moderate deficits among the European and Transcaucasian Post-Soviet
states. The trade with Georgia's major partners continued growing. As an example, in
2016, Georgia exported $87,263.53 worth of products to Armenia, and imported
$144,931.92 worth of products from Armenia. [38] Deficits in current account have been
more than offset by strong foreign capital inflows, [39] allowing the Georgian currency to
appreciate.[40]
Evolution of GDP per capita (PPP) in Georgia and other FSC between 1994–2021 and future projections for
2022–2026

Current account balance

Rank Country 2011 IMF estimates[41]
as a percentage of GDP (2010)[41]

1  Azerbaijan 27.662 22.664

2  Russia 4.807 5.518

3  Ukraine −2.091 −3.893

4  Armenia −13.873 −11.697

5  Belarus −15.522 −13.442

6  Lithuania 1.835 −1.860

7  Moldova −8.300 −9.897

8  Estonia 3.565 2.424

 Current account balance
Rank Country 2011 IMF estimates[41]
as a percentage of GDP (2010)[41]

9  Georgia −9.618 −11.700

10  Latvia −22.938 −8.320

The government has managed to preserve financial stability thanks to the considerable
aid provided by the US and international institutions. EBRD analysts believe that
substantial international financial support and remittances from workers living abroad
will cover the current account deficit in the medium term. [42] IMF positively evaluated
government's economic policy.[43]

2015 2016 2017 2018 2019* 2020

GDP at current prices, billion GEL 33.9 35.8 40.8 44.6 50.0 49.4

GDP at constant 2015 prices, billion

33.9 34.9 36.6 38.4 40.4 37.8
GEL

GDP real growth, percent 3.0 2.9 4.8 4.8 5.1 -6.2

GDP deflator, percent 5.8 2.6 8.5 4.4 6.6 6.9

GDP per capita (at current prices), GEL 9 109.4 9 613.9 10 933.9 11 968.0 13 428.9 13 292.7

GDP per capita (at current prices), USD 4 012.6 4 062.1 4 358.5 4 722.0 4 763.5 4 274.6

GDP at current prices, billion USD 14.9 15.1 16.2 17.6 17.7 15.9

Foreign direct investment in Georgia[edit]

Large inflows of Foreign direct investment (FDI) have been a driving factor behind a
rapid economic growth in Georgia since 2003. [44]
An attractive and liberal investment environment and equal approach to local and
foreign investors makes the country an attractive destination for FDI.
Stable economic development, liberal and free market oriented economic policy, 6 taxes
only and reduced tax rates, reduced number of licenses and permissions, dramatically
simplified administrative procedures, preferential trade regimes with foreign countries,
advantageous geographic location, well developed, integrated and multimodal transport
infrastructure, educated, skilled and competitive workforce presents a solid ground for
successful business in Georgia. In addition to other advantages, Georgia has Free
Industrial Zones, where companies are exempt from all the corporate taxes. [45]
From 2003 to 2011, FDI in Georgia amounted to US$8511.5 million. The highest
volume of FDI – 2,015.0 million USD was reached in 2007, with 69.3% yearly growth.
[46]
 High rate of investment was maintained until 2008. In 2007, the EC27 accounted for
over 56% of FDI inflows and in 2008 the EC, UAE, and Turkey accounted for nearly
60%.[47] In 2009, FDI inflows were characterized by decreasing trend. The main reasons
of decreasing were external shocks – Russian-Georgian war and the influences
of global financial crisis.
In the first half of 2017, Armenian Investments to Georgia nearly doubled year-on-year
to $5.6 million, while investments from Azerbaijan dropped by 20.3% year-on-year to
the overall $224.18 million.[48]
• In 2009–2011 the largest share of FDI felt on Industry sector (31.2) amounted to
US$765 million, real estate sector (15.8%) amounting to US$389 million. [46]
The table below shows FDI stock as a percentage of GDP in selected FSU countries.
[49]
 For statistical purposes, FDI is defined as a foreign company owning 10% or more of
the ordinary shares of an incorporated firm or its equivalent for an unincorporated
firm. [50]

Rank Country FDI stock as a percentage of GDP (2010)

1  Estonia 85,6

2  Georgia 67,1

3  Kazakhstan 61,1

4  Ukraine 42,5
 Rank Country FDI stock as a percentage of GDP (2010)

5  Russian Federation 28,7

6  Armenia 18,5

7  Belarus 18,3

Foreign direct investment in the country of Georgia by year.

Year Amount (mln USD)

2000 131.2

2001 109.8

2002 167.3

2003 340

2004 499.1

2005 449.7

2006 1100

2007 2010

2008 1500

2009 658.4
 Year Amount (mln USD)

2010 814[51]

2011 1111[52]

2012 865[53]

2013 914[citation needed]

2014 1750 [54]

2015 1564 [55]

2016 1565.9 [56]

2017 751 (January–June) [57]

Trade[edit]

  Georgia
  Countries with whom Georgia signed Free Trade Agreement (FTA)
  Countries with whom Georgia has General Schemes of Preference (GSP)
Since 2014, Georgia is part of the European Union's Free Trade Area, with the EU
continuing to be the country's largest trading partner, accounting for over a quarter of
Georgia's total trade turnover.[30] Following the EU trade pact, 2015 was marked by
further increase in bilateral trade, whereas trade with the Russian-led Commonwealth of
Independent States (CIS) decreased by 22%.[31]
As of 2015, in the order of magnitude, Georgia's main exports were: copper ores and
concentrates, ferroalloys, hazelnut, medications, nitrogen fertilizers, wine, crude
oil, mineral water, non-denatured ethanol and spirits.[31]
In 2015, Georgia's main imports, in the order of magnitude, were: oil
products, vehicles, hydrocarbons, copper ores and concentrates, mobile phones and
other wireless phones, wheat, cigarettes, iron tubes and pipes, structures and parts of
structures of iron.[31]
In 2019, Georgian exports to Armenia grew by 2% compared to previous year, while
imports decreased by 7%. Georgia exported 98.3 million $ worth of products to Armenia
(4% of total exports), and imported 46.9 million $ (1% of total imports) in 2019. [58]

International money transfers[edit]

Money transferred from abroad to Georgia in 2019 amounted to USD 1.73 billion,
according to figures released by Georgia's central bank. Money transfers from Russia,
which has been the largest source of remittances for Georgia for many years already,
stood at USD 428.89 million in 2019.[59]
Among other largest sources of remittances for Georgia are: Greece with USD 192.56
million in 2019, Italy – USD 239.17 million; the United States – USD 178.41
million; Ukraine – USD 47.3 million; Spain – USD 30.9 million; Turkey – USD 94.85
million; Kazakhstan – USD 26.63 million; the UK – USD 16.89 million; Israel – USD
162.55 million; Azerbaijan – USD 22.17 million; Germany – USD 49.81 million; France –
USD 26.37 million; Canada – USD 14.21 million.[59]

Institutional reforms[edit]
Under the Saakashvili administration, Georgia undertook a number of profound
institutional reforms aimed at modernizing the economy and improving business
climate. Kakha Bendukidze (1956–2014) was one of the most notable team members
during his governance, coordinating the Ministry of Economical Reforms of Georgia.
Implemented institutional reforms created an effective, professional and transparent
public sector, motivated to protect the principles of democracy. Due to the economic
deregulation policy, number of state regulated spheres sharply decreased, as well as
regulation procedures were simplified.
Georgia succeeded in fighting against corruption, that was the one of the main
obstacles for development. Success of Georgia is recognized by different rating
agencies. According to the Transparency International, Georgia is the top country in the
post-Soviet region in terms of fighting corruption. According to the Corruption
Perception Index published by Transparency International, Georgia ranked 50th in
2014[60] (up from 113rd in 2004).[61] "Global Corruption Barometer 2010" ranks Georgia
the first among world countries in the term of decrease corruption level. [62] According
to International Finance Corporation Business Perception Survey 2012 only 0.11% of
surveyed (1 respondent out of 920) named corruption as a problem in relations with
public organizations.[63]
Georgia has the most liberal tax jurisdiction in Europe. The number of taxes is
decreased from 21 to only 6, tax rates were reduced also. In addition, significant
procedural and institutional reforms was implemented – simplified system of tax
disputes was established, tax administration system was streamlined and most of taxes
currently are paid on-line.
Due to the customs reform customs procedures were dramatically simplified. Customs
tariffs reform significantly simplified and sharply reduced the costs connected to the
foreign trade. Number of import tariffs was abolished on approximately 90% of products
and only 3 tariff rates exist instead of previous 16. Currently 86% of tariff lines are duty-
free compared to 26% in 2005. Modern Customs Clearance Zones were established
and customs clearness procedures could be made starting from 15 minutes only.
Modernization of system of licenses and permits resulted in decrease of number of
licenses and permits and simplification of related administrative procedures.
Privatization of state property – Starting from 2004, provision of transparent privatization
policy was one of the important reforms of the Government of Georgia, that was
addressed to denationalization of the remained state property in order to attract foreign
investments, increase and develop the private sector and effective use of country's
resources.
Liberal labour legislation simplified the relations between employers and employees. As
a result of the reform, ”Heritage Foundation” and other analytical centers named
Georgian Labour Code as one of the most liberal in the world, because it significantly
reduced hiring and firing expenses.
Georgia offers the most simplified procedures for registration of business, property, for
getting different documentations via “One-Stop-Shops”, where the most procedures
could be done on-line. Doing Business 2012 report (WB) places Georgia 16th in terms
of Ease of Doing Business index (up from 112 in 2006), naming Georgia as the top
reformer amongst the 174 countries over the last 5 years. Georgia is amongst the
leaders in other ratings, namely, registering property – first place; Dealing Construction
Permits – 4th place, Starting a Business – 7th place; Getting Credits – 8th place. [64]
Licensing regulation[edit]
Due to the reform of the system of licenses and permits, the number licenses and
permits was reduced by 90%. Currently, licenses and permits are only used in the
production of highly risky goods and services; also usage of natural resources and
specific activities. The procedures of issuing licenses and permits were significantly
simplified, the “One-Stop Shop” and “Silence is Consent” principles were introduced
which implies that if person is not notified with argumentation rejection about issuance
of license in limited framework, the license is considered as issued from the relevant
body.
The procedures for getting a construction permits was dramatically simplified and it
requires just 3 procedures. The time for getting the construction permits was sharply
reduced. According to Doing Business 2012 (WB) Georgia is the best performer in the
Eastern Europe and Central Asia (ECA) region and places on 4-th position in the world.
The number of procedures and days, the cost (% of income per capita) is much more
lower, than in ECA region and OECD countries.
Things have changed after new Law on Issuance of Licenses and Permits was
introduced in 2005. The approval process for building a warehouse in Georgia is now
more efficient than in all EU countries except Denmark.
Tax collection[edit]
Main article: Taxation in Georgia (country)
Since January, 2011 the new Tax Code came into force. It unifies the old Tax and
Customs Codes. The new Tax Code increased confidence towards the Georgian tax
system and enhanced trust in the Georgian tax authorities, by improving communication
between taxpayers and the tax authorities, by protecting the taxpayers’ rights, by
making administration more efficient, and by harmonizing the Georgian laws with the
best international tax practices and EU directives.
Only 6 taxes exist in Georgia with law tax rates: Income Tax (personal income tax) 20%;
Profit Tax (corporate tax) – 15%; Value Added Tax – 18%; Excise – varies; Property
Tax up to 1% of the self-assessed value of property; Customs Tax – 0%; 5%; 12%. In
addition, significant procedural and institutional reforms were performed, simplified tax
dispute settlement, streamlined tax administration decreased the time and cost of
paying taxes. Georgia made paying taxes easier for firms by simplifying the reporting for
value added tax and introducing electronic filling and payment of taxes. [65]
Number of import tariffs was abolished on approximately 90% of products and only 3
tariff rates (0%, 5%, 12%) exist instead of previous 16. Georgia sets Import Taxes on
only several kinds of agricultural and manufactured goods . In addition, there are no
quantitative restrictions (quotas) on imports and exports. [65]
Labour regulation[edit]
With unemployment around 16% and many jobs in the informal sector, Georgia
undertook a far-reaching reform of labour regulation. The new Labour Code was
adopted on 17 December 2010. The new law eases restrictions on the duration of term
contracts and the number of overtime hours and discards the premium required for
overtime work. It also eliminates the requirement to notify and get permission from the
labour union to fire a redundant worker. The new law provides for 1 month's severance
pay at least, replacing complex rules under which required notice periods depended on
seniority and the manager had to write long explanations to labor unions and the
relevant ministry. In general, new regulation makes Georgian labor market much more
flexible.
Coupled with the fact that Georgia also reduced the social security contributions paid on
wages by businesses from 31% to 20% in 2005, and abolished them entirely starting
January 2008, these changes make Georgia the sixth easiest place to employ workers
globally.
Judicial procedure[edit]
Reducing corruption in courts was one of the chief priorities of the new government.
Since 2004, when the Saakashvili administration came in, seven judges have been
detained for taking bribes and 15 brought before the criminal courts. In 2005 alone the
judicial disciplinary council reviewed cases against 99 judges, about 40% of the
judiciary, and 12 judges were dismissed. At the same time judges’ salaries were
increased fourfold, to reduce dependence on bribe money. [66]
According to Global Property Guide index, Georgia currently holds 40 points out of 100.
[67]
 That stands for "The court system is highly inefficient, and delays are so long that
they deter the use of the court system. Corruption is present, and the judiciary is
influenced by other branches of government. Expropriation is possible." [68] Some
unsatisfied responses concerning the judiciary system may be found among Georgian
websites, though its genuineness is controversial.

Unemployment[edit]
Unemployment has been a persistent problem in Georgia ever since the country gained
independence in 1991. According to National Statistics Office (Georgia) unemployment
rate stood at 16.9% in 2013 and it has been decreased at 11.6% in 2019. [69]
Nearly a half of Georgia's population lives in rural areas, where low-intensity self-
sufficient farming provides the principal source of livelihood. [70] Georgian statistics
service puts individual persons into the category of self-employed workers. As of 2007
416,900 persons were listed as self-employed in agriculture. [71] For large families, heads
of households are typically described as "individual entrepreneurs", members of the
family that help to cultivate land are classified as "unpaid family business workers". The
use of this methodology produces relatively low unemployment rates for rural areas
rather in urban areas and in Tbilisi.[72] Neighbouring countries show somewhat similar
results. For example, Armenia in 2015 had 18.26% unemployment rate, which is
532.644 people.[73][74]

2014 2015 2016 2017 2018 2019 2020

Active population (labour force), thousand 1 1 1 1 1 1 1

persons 629 675.6 653.8 641.4 605.2 572.8 523.7

1 1 1 1 1 1 1
Employed, thousand persons
255 308.5 294.5 286.9 296.2 295.9 241.8

Unemployed, thousand persons 374 367.2 359.2 354.5 309.0 276.9 281.9

Unemployment rate, percentage 23.0 21.9 21.7 21.6 19.2 17.6 18.5
[75]

Structure of the economy[edit]

Energy[edit]
Main article: Energy in Georgia (country)

Enguri hydropower plant, completed in 1987

In recent years Georgia has fully deregulated its electricity sector, and now there is free
and open access to the market.
Georgia has a sizable hydroelectric capacity, a factor that has become an increasingly
important component of its energy supplies and policies. The country's topography and
abundance of hydro resources give it serious potential to dominate hydroelectric
markets in the Caucasus region. The Georgian Ministry of Energy estimates that there
are around 26,000 rivers within Georgian territory, with approximately 300 of those
rivers being significant in terms of energy production. The Ministry also claims that
current projects for hydroelectric power plants total around US$2.4 billion. [76] Alexander
Khetaguri, the former Georgian Minister of Energy, proposed new hydroelectric projects
worth well over 22,000 megawatts of capacity, which would cost over US$40 billion and
would be privately funded. These projects alone would transform Georgia into the
world's second-largest hydropower producer. [citation needed][77]
In 2007, Georgia generated 8.34 billion kilowatt-hours of electricity while consuming
8.15 billion kWh.[78] Most of Georgia's electricity generation comes
from hydroelectric facilities. In 2005, the country generated 6.17 billion kWh of
hydropower, or 86% of total electricity generation. [79] In 2006 rapid growth in
hydroelectricity output (by 27%) was matched by equally strong growth in thermal
electricity (by 28%).[80] Since then the share of hydropower has grown even bigger,
when Inguri power plant reached full capacity in November 2007. [81] In addition to state-
owned Inguri, which has an installed capacity of 1,300 megawatts, Georgia's
hydroelectric infrastructure consists of many small private plants. [82]
In recent years, Georgia became a major exporter of electricity in the region, exporting
1.3 billion KWh in 2010. Hydropower stations of Georgia produce 80-85% of the
electricity utilized within the country, the remaining 15-20% is produced by thermal
power stations. According to Ministry of Energy and Natural Resources, so far Georgia
has been exploiting only 18% of its hydro resource potential. [83]
Georgia's reliance on hydropower leaves the country vulnerable to climatic fluctuations,
which requires imports to meet seasonal shortages, but also opens the possibility of
exports during wetter conditions. Georgia still has the potential to increase hydro-
generated power, through refurbishing existing facilities, as well as constructing new
hydropower plants.
One of the more difficult realities facing many of the former Soviet republics was the
loss of Soviet-subsidized fuel and utility transfers. Prior to 2004, Georgia's transmission
network was in critical condition, with electricity blackouts being common throughout the
country. In response to mounting pressures, the Georgian government initiated a series
of legislative reforms in 1998 and 1999 to begin to develop the power sector and
electricity markets. While measures were taken to unbundle and liberalize the energy
sector, a new law was drafted and Georgia's independent regulatory authority,
the Georgian National Energy Regulatory Commission (GNERC), was formed. In
addition to providing government subsidies, the GNERC was able to increase the prices
of electricity and natural gas in Georgia to buffer the costs of recovery from the state's
reform process.[84] Following these reforms, distribution has been increasingly more
reliable, approaching consistent 24-hour-a-day services. Investments in infrastructure
have been made as well. Currently, a privately owned Energo-Pro Georgia controls
62.5% of the electricity distribution market. [85]

Graphical depiction of Georgia's product exports in 28 color-coded categories

Georgia has transmission lines that connect its power grid

to Russia, Turkey, Armenia and Azerbaijan. In July 2008 Georgia began exporting
electricity to Russia through the Kavkasioni power line. [86] Later in 2009, Georgian
Energy Minister Alexander Khetaguri incited scandal for a business deal struck with the
Russian energy company, Inter RAO, to jointly manage the Georgian Inguri hydropower
plant for 10 years.[87] Khetaguri's proposal would entail a cash flow of around US$9
million into Georgia for use of the plant. Tensions ran high, however, as the Inguri
hydropower plant provides nearly 40 to 50 percent of the country's electricity and is
located at the administrative border of the secessionist Abkhazia region.[88]
Georgian Natural gas consumption stood at 1.8 billion cubic meters in 2007. Natural gas
used to be supplied to Georgia by Russia. In recent years, however, Georgia has been
able to eliminate its dependency on imports from Russia, thanks to increased
hydroelectricity production, and the availability of natural gas sources from Azerbaijan.
In addition, all Russian gas exports to Armenia pass through the Georgian pipeline
system. Georgia takes 10% of that gas as a transit fee. [89]
Georgia is a partner country of the EU INOGATE energy programme, which has four
key topics: enhancing energy security, convergence of member state energy
markets on the basis of EU internal energy market principles, supporting sustainable
energy development, and attracting investment for energy projects of common and
regional interest.[90]
Agriculture[edit]
Main article: Agriculture in Georgia (country)
Currently, about 55% of the total labor force is employed in agriculture, though much of
this is subsistence farming.[91]
Georgian agricultural production is beginning to recover following the devastation
caused by the civil unrest and the necessary restructuring following the breakup of the
Soviet Union. Livestock production is beginning to rebound, although it continues to be
confronted by minor and sporadic disease outbreaks. Domestic grain production is
increasing, and government invests in improvement of infrastructure improvements to
ensure appropriate distribution and revenues to farmers. Tea, hazelnut and citrus
production have suffered greatly as a result of the conflict in Abkhazia, a crucial area for
planting the latter crops.
Approximately 7% of the Georgian GDP (2011) is generated by the agrarian sector.
Viticulture and winemaking are the most important fields of Georgia's agriculture. Over
450 species of local vine are bred in Georgia, and the country is considered as one of
the oldest places of producing top-quality wines in the world. Russia was traditionally
the biggest export market for Georgian wine. This, however, changed in 2006, when
Russia banned imports of wine and mineral water from Georgia, preceded by
statements of Georgian governmental officials about low quality requirements of the
Russian market.[92] Since then Georgian wine producers have struggled to maintain
output and break into new markets.
In 2011 Georgia sold wine in total amount of 54 mln USD in 48 countries and alcoholic
beverages in total amount of 68 mln USD in 32 countries. Vines and alcoholic
beverages are in the top 10 export commodity's list with 2,5% and 3.1% share
respectively.[93] According to National Wine Agency of Georgia export of Georgian wine
is increasing. 2011 wine export is 109% higher than 2007 exports. According to 2012
information, Georgia trades wine with 43 countries, selling over 23 million bottles.
Biggest export partners for Georgia in wine industry are Ukraine (47.3% of wine export),
Kazakhstan (18.9%) and Belarus (6.9%).[94] In 2011 export of vines, mineral waters and
alcoholic beverages exceeded export of all years after 2006. Georgia is rich with spring
waters and production of mineral waters is one of the main spheres of industry. Export
of mineral waters in 2011 amounted to 48 mln USD in 35 countries. Share of mineral
water in total export is 2.1%.[93] Food processing industry is developing align with the
primary agricultural production and export of processed products is increasing year by
year. Export of nuts constituted about 6% of Georgian export (2011) and is among 10
top export commodity list with total amount of 130 mln USD. Nuts was exported in 53
countries.[93]
Rural population as a percentage of total population in Georgia was 48.2% in 2011 and
decreased to 46.3% in 2014.[95]
Georgia produced in 2018:

 259 thousand tons of grape;

 237 thousand tons of potato;
 194 thousand tons of maize;
 107 thousand tons of wheat;
 82 thousand tons of apple;
 62 thousand tons of tangerine;
 57 thousand tons of barley;
 57 thousand tons of watermelon;
 51 thousand tons of tomato;
 33 thousand tons of cucumber;
 27 thousand tons of peach;
In addition to smaller productions of other agricultural products. [96]
Tourism[edit]
Tourism in Georgia (country) is one of the fastest growing sectors of the local economy,
which has high potential for further development. During recent years the number of
visitors to Georgia increased significantly contributing to the growth of other tourism
related sectors. In 2011, more, about 3 million visitors visited Georgia 40 percent more,
than in 2010.[97] To foster the development of the tourism sector the Government of
Georgia invests heavily in the development of the transportation and basic
infrastructure, renovation and development of tourism destinations, which is a stimulus
for the private investment generation. In 2011, total output of tourism related services
production increased by 77% compared to 2006 and constituted 7.1% of total output of
economy.[98] In 2018 tourism generated 3.4 billion dollars in tax revenue for Georgia. [99][100]
The following table shows the monthly average for incoming tourists in Georgia by
citizenship and number of visits (in thousands).[101]

Country 2015 2016 2017 2018 Change 2015–2018

Azerbaijan 96,3 89,7 108,5 118,7 23,2%

Armenia 99,3 96,0 107,3 105,7 6,5%

Iran 1,8 10,8 23,5 24,3 1221,9%

 Country 2015 2016 2017 2018 Change 2015–2018

Israel 4,6 7,1 9,6 13,1 183,1%

Russia 63,6 70,8 94,6 117,1 84,1%

Turkey 89,5 82,4 83,9 91,5 2,3%

Ukraine 10,6 12,6 14,2 14,8 39,0%

European
17,8 19,1 23,6 32,1 80,4%
Union

Other countries 17,6 25,1 37,1 43,3 146,0%

Total 438,0 449,4 540,2 600,3 37,1%

According to data from Georgia's National Tourism Administration, TASS reported that
Armenia is third on the list of countries with the most visits from citizens in 2021. Turkey
leads the pack in terms of trips made by visitors to Georgia last year, with 326
thousand, 2.7% fewer than in the previous year. With more than 212 thousand tourist
visitors, 2.1% more than in 2020, Russia comes in second. [102] Georgia received over 1.8
million international visits in total in 2021, an increase of 7.7% from the previous year.
Logistics[edit]
Georgia is one of the key members in international TRACECA programme due to its
important geographical and political location. Since it is situated right in between of
Europe and Asia, the country is supposed to become a busy transitional hub of a
modern Silk Road in the near future. On March 11 of 2015, Georgian media declared
that the Chinese and Georgian companies have reached an agreement in Beijing
concerning the developing of the deep-water port at Anaklia, which existence is crucial
for the TRACECA route.[103] The port will be constructed on a plot of over 1,000 hectares
and have access to a deep sea canyon.[104] US-Based SSA Marine was later finally
chosen to Invest in and Operate Container Terminal of Anaklia Deep Sea Port in
Georgia by signing an agreement with Anaklia Development Consortium on 1 August
2017.[105]
First train containing 82 containers and 41 platforms came from China to Baku,
Azerbaijan on July 28. It is planned to launch a first carriage using this way through
Georgia to Istanbul in September 2015.[106] Baku–Tbilisi–Kars railway became
operational on October 30, 2017.[107]
Re-exportation of vehicles which is one of the income sources for Georgia has lowered
much during 2014–2015 stagnation, most noticeably to Azerbaijan: it became 5.1 times
less (on 10 337 cars) comparing to the previous year. [108]
Finance[edit]
Like most other post-soviet countries, Georgia's finance sector is dominated by banks.
As of 2015, there were 21 commercial banks, of which 5 large banks controlled most of
financial assets.[109] There are some major challenges facing the banking sector. For
instance, banks play a limited role in financing the real economy and in investing in
activities that are required to stabilize the country's persistent trade.

Human Development Index of Georgia[edit]

Human Development Index is a composite statistic of life expectancy, education, and
income indices used to rank countries into four tiers of human development. Georgia's
HDI value for 2017 is 0.780— in the high human development category—positioning it
at 70 out of 189 countries and territories. The rank is shared with Antigua and Barbuda.
Between 2000 and 2017, Georgia's HDI value increased from 0.673 to 0.780, an
increase of 15.9 percent or average annual increase of about 0.9 percent. Between
1990 and 2017, Georgia's life expectancy at birth increased by 3.1 years, mean years of
schooling increased by 1.1 years and expected years of schooling increased by 2.6
years, also Georgia's GNI per capita increased by about 21.0%. However, it is
misleading to compare values and rankings with those of previously published reports,
because the underlying data and methods have changed over time. [110]

Life expectancy at Expected years of Mean years of GNI per capita HDI
Year
birth schooling schooling (2011 PPP$) value [110]

1990 70.3 12.4 N/A 7589 N/A

1995 70.5 10.9 N/A 2273 N/A

2000 71.9 11.7 11.7 3404 0.673

2005 72.7 12.6 12.1 4983 0.712

2010 72.6 13.3 12.2 6517 0.735

2015 73.1 14.7 12.7 8766 0.771

2016 73.3 15.0 12.8 8785 0.776

2017 73.4 15.0 12.8 9186 0.780

See also[edit]
 List of Georgian companies
 List of countries by received FDI
 Kulevi Oil Terminal

Further reading[edit]
 Gugushvili, Alexi: "Understanding Poverty in Georgia" in the Caucasus Analytical
Digerst No.34

Notes[edit]
1. ^ data cover general government debt and include debt instruments issued (or owned) by government
entities other than the treasury; the data include treasury debt held by foreign entities; the data include
debt issued by subnational entities; Georgia does not maintain intragovernmental debt or social funds