The publication was made possible by the Black Sea Trust, a project of the German Marshall Fund of the United States. Opinions Expressed in this publication do not necessarily represent those of the Black Sea Trust or its partners. International Trade
Export mil. USD Import mil. USD 250 -15 800 1.10% 5 247,4 0 226,8 700 200 212,9 202,5 600 -8.77% -5 590,4 185,0ვ 2019 611,3 -10 174,7 500 550,9 544,9 557,7 150 2020 -15 -17.94% 400 -18.15% -18.25% 356,4 -20 100 300 -25 200 50 -30 100 -39.63% -35 0 -20 0 -40 February March April February March April
The pandemic has harmed international trade. In parallel with the decline in global demand, severe restrictions have slowed production processes and disrupted the global value chain. In February-April, exports fell by more than 18%. Consumption of imports was still reflected in March (-9%). Strict restrictions in April had an even more negative impact on imports, down about 40% from April 2019.
Source: Ministry of Finance of Georgia Exchange Rate Dynamics (Jan-May 2020)
GEL
RUB
TRY
UAH
AMD
AZN
Georgian Lari was characterized by high fluctuations before the spread of the pandemic. The effect of COVID-19 has significantly weakened its positions. In March, the lari depreciated by a record of 22%. During the year, the Georgian lari and the Ukrainian hryvnia - against the US dollar - depreciated by 12%. By comparison, the Russian ruble is down about 20 percent, the Turkish lira is down about 16 percent, and the Armenian dram and the Azerbaijani manat are down 2 percent. Source: Bloomberg 800 Tourism (International Visitors) 7002019 647 770 611 325 6002020 500 469 545 466 409 400
300 233 479 200 100 35 497 0 February March April
The decline in international traveler visits began in February (-0.7%). Visits in March (-62.3%) and April (-94.5%) declined sharply, which was a logical consequence of closed borders and suspended air traffic. With the slowdown in world tourism, it is unlikely that international travelers' visits to Geor- gia will return to their old highs in a short time.
Source: Georgian National Tourism Administration International Remittances $138,4 mil. (2019)
Remittance to Georgia decreased by The difference in remittances between $137,1 mil. (2019) 9%. Compared to the corresponding April 2020 and April 2019 increased by period of 2019, in March 2020, less up to 43.2%. The volume of remit- $125,9 mil. (2020) than $12.5 million in remittances were tances in the country is $58 million imported. less than in 2019. $79,1 mil. (2020)
Source: National Bank of Georgia
873.6 mil. GEL (2019) Revenues
The tax and customs revenues de- 769.1 mil. creased by 12% in April 2020 com- GEL (2020) pared to the same period of the previ- ous year, which has been steadily increasing since 2009 (excluding the 2018 decrease).
Source: Revenue Service Economic Forecast (IMF, 2020) Ukraine
Russia Turkey -7.7% Georgia -5.5% -5.0% Azerbaijan -4.0% Armenia -2.2% -1.5%
According to the forecast of the International Monetary Fund, the economy in Georgia, as well as in the region as a whole, will decrease. Although the IMF forecasts an average decline of only 1% in emerging economies, more severe consequences are expected in the region. In 2020, Georgia's economy will shrink by 4%, which is more positive than what is expected in Russia, Turkey, and Ukraine, but Georgia's economic recession rate will be twice as high as that of Azerbaijan and Arme- nia.
Source: IMF Economic Forecast (EBRD, 2020)
Georgia Russia Ukraine Turkey Armenia -5.0% Azerbaijan -4.5% -4.5% -3.5% -3.5% -3.0%
A review published by the European Bank for Reconstruction and Development (EBRD) in April com- pared to the IMF's expectations assessed the future of the Georgian economy as even more nega- tive and predicted a 5% reduction in the economy in 2020. It is noteworthy that the EBRD analysis is less pessimistic about the economic future of Russia, Ukraine, and Turkey in the region. However, unlike the IMF, it predicts more severe consequences and about 3% stagnation in Azerbaijan and Ar- menia.
Source: EBRD Inflation rate (IMF, 2020)
12 10 8 6 12% 4 4.6% 4.5% 2 3.1% 0.8% 3.3%
0 Georgia Russia Turkey Ukraine Armenia Azerbaijan
According to the International Monetary Fund, inflation is expected to affect each country in the region differently. Consumer basket prices will rise significantly in Turkey, where inflation will rise to 12%. Inflation in Georgia and Ukraine is approaching 5%. In Russia and Azerbaijan, about 3% infla- tion is predicted. According to the IMF, Armenia will have the lowest inflation rate in the region and will remain below 1%.
Source: IMF