First Quarter Saw 10 Years’ Best Economic Indicators.
Geostat, the national statistics service of Georgia, has published the macroeconomic indicators of the first quarter of 2016. The report shows that the country has seen similar positive figures for the first time since 2007-2008, when GDP growth was recording 9-12%.
According to the Geostat report, in the first quarter of 2016 the foreign direct investments rose by 103%. According to an early report, the FDI inflows in the first quarter of 2016 made up 376 million USD, up 103% compared to the same period of 2015.
In the reporting period Azerbaijan emerged as Georgia’s major investor country with 36% ratio. Turkey ranks second with 15% ratio and the United Kingdom is third with 12%.
The ratio of three leading sectors in total FDI inflows marked 79%. Major part of foreign direct investments were made in the sector of transport and communications and total FDI injections in the field made up 200 million USD, 53% in total FDI inflows. The finance sector is second with 58 million USD and the power sector is third with 40 million USD.
Record indicators were registered in the tourism sector too. In January to May 2016 the inflow of international tourists and visitors has extremely increased. In May 2016 the inflow of international visitors increased by 14.95%, while the inflow of tourists, i.e. those who have stayed in the country for 24 hours and more has increased by 24.3%. According to the 2015 total indicators, the tourism sector revenues marked 1.94 billion USD and the year on year growth made up 8.3% (+149 million USD year on year). The tourism sector ratio in GDP also increased by 16.2% and made up nearly 6.8%.
The Geostat’s first quarter report casts light on why the Georgian national currency has strengthened over the past 3 months. Foreign currency inflows in terms of FDI were enhanced by the tourism sector revenues too. The negative trade balance in the trade turnover has also slightly improved.
It should be noted that in the first quarter of 2016 the business sector turnover rose by 15.4% compared to the same period of 2015 and made up 12.7 billion GEL. The business sector’s output has also increased. In the reporting period, the sector’s output made up 6.5 billion GEL, up 15% compared to the same period of 2015.
In the first quarter of 2016 the ratio of major business sector in total turnover marked 82.8%, medium-sized business – 7.6% and small business – 9.7%.
Moreover, the number of employees in the business sector has also increased by 5.9% to 577 000 persons. This signifies that the business sector has created 32 257 new job places in addition.
It should be noted that according to the 2015 employment report, in 2012-2015 the number of employees increased by 50 000 persons, while in only January to March 2016 the employment index increased by 32 000 individuals.
Naturally, the above-mentioned macroeconomic indicators have influenced the basic indicator of the economic advancement and in the first quarter of 2016 the GDP growth made up 2.8%. In April the economic growth made up 4.3%.
At the government meeting, Georgian Prime Minister Giorgi Kvirikashvili has widely overviewed the improved economic indicators.
“I believe domestic and external investors positively appraise many indicators and their expectations will be more positive. Both domestic investments and FDI inflows will increase in the country. Even more so we have implemented and the Parliament as adopted the taxation system liberalization package that will make the economic environment more attractive starting January 1, 2017”, Prime Minister Giorgi Kvirikashvili said.
It is worth noting several weeks ago Mr. Kvirikashvili noted that Georgia would reach the level of a medium European country in 10 years. Moreover, ex Prime Minister of Georgia Bidzina Ivanishvili said that by 2030 Georgia’s GDP would increase four times and will reach 40 000 USD in terms of solvency parity.
Naturally, everybody welcomes these forecasts and promises, but if we genuinely want to achieve the level of a medium European country in 10-15 years, Georgia should record similar positive economic indicators in all quarter periods and the GDP growth rate must exceed 10%.
Merab Janiashvili Economic Analyst