Report by the Caucasus University Economic Research Center

(Dynamics of net exports, major partner countries, exports in EU Countries, Influence on Economic Growth)

In 2013 Georgia’s foreign trade turnover (excluding unorganized trades) marked 10 793million USD, up 5% compared to 2012, including exports constituted 2 908 million USD, up 22.4% year on year and the imports equaled 7885 million USD, up 1% year on year. Georgia’s negative trade balance made up 4 977 million USD in 2013, that is 46.1% in the foreign trade turnover”, says GeoStat, the National Statistics Office of Georgia.

It is interesting whether Georgia’s exports activities in 2013 were successful? Why could not the fruitful foreign trade to sufficiently stimulate growth in economy? Why GDP has increased by only 3.2%, the lowest rate since 2010?

These questions may be answered through valuable exploration of the exports structure.

Last year the ratio of re-exports in Georgia’s total exports marked 36% (1.55 billion USD). The figure is an absolute record in Georgia’s re-exports. For comparison, the 2012 re-exports marked about 763 million USD ($763,042,679), the 2011 figure equaled 488 million USD and the 2010 report fixed 298 million USD ($297,808,372).

To outline a real picture of Georgia’s exports, we should make focus on net exports without re-exports.

In 2013 net real exports constituted 1.855 billion USD (1854725276), in 2012 – 1.614 billion USD ($1 614 411 306), in 2011 – 1.701 billion USD ($1 700 987 001), in 2010 – 1.286 billion USD ($1 285 528 658) and in 2009 – 990 million USD ($990 096 305).

The last 5 years’ highest upturn in net exports of 32.3% was recorded in. A high rate was also registered in 2010 (29.8%). The trend worsened in the following years. The year of 2012 turned out the worst for Georgian exports, as the real exports shrunk by 5.1%. As to 2013, real exports rose by 14.9% in 2013, up 9% compared to 2011.

The last year recorded a formation of interesting exports trend with EU countries too. According to the GeoStat calculations, in 2013 Georgia’s total exports with EU countries marked 608 million USD, up 73% compared to 2012. At the same time, the 2012 exports with EU considerably shrank by 16.7% compared to 2011.

The real picture will become more evident if the exports are appraised without re-exports. In 2013 Georgia’s net exports with EU marked 430 million USD, up 52% compared to 2012 and up 8.5% compared to 2011 (Net Exports of over 10 million USD in RED, from 1 million USD to 10 million USD in BLUE and under 1 million USD in GREEN)

NET Exports with EU (in USD)

 Microsoft Word - Document1

The net exports dynamics makes significant influence on formation of the total economic growth rate. Annual economic growth rate largely depends on the previous year’s growth rate in net exports. For example, a 6% economic growth in 2012 was preceded by a 32% upturn in net exports in 2011. The 2011 net exports revenues could not fully affect the economy in the same year and its effect turned out particularly strong in 2012 for growth in GDP. At the same time, a 5% downturn in the 2012 net exports considerably retarded the upturn in the 2013 GDP, while a 15% upturn in 2013 net exports will make more influence on the 2014 economic growth than this was reflected on the 2013 GDP.