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Re-investments Marked 32% in 2016 Total Investments

Foreign investments marked 1645 million USD in 2016, up 81 million USD compared to 2015 and down 113 million USD compared to 2014.

According to preliminary indicators, foreign direct investments volume in Georgia made up 1645 million USD in 2016, up 22% compared to preliminary indicators of 2015 and up 5% compared to specified indicators of 2015. Two years ago, foreign direct investment inflows marked 1 564 million USD, while the figure totaled 1 758 million USD in 2014.

According to Geostat information, in 2016 reinvestments  made up 32% of total investments and this is the highest figure for the past years. For example, in 2012 reinvestments marked 13%, in 2013 – 28%, in 2014 – 18% and in 2015 – about 9%.

Ratio of three major investor countries in total foreign direct investments, according to the 2016 preliminary indicators, constituted 59%.

Azerbaijan ranks first with 35% (578 million USD) in terms of foreign direct investments, Turkey is second with 17% (121 million USD). It should be noted that it is the second year Azerbaijan remains Georgia’s number one investor country. Before, Turkey and the Netherlands were Georgia’s major investor countries.

Ratio of three major sectors (due to foreign direct investments) constituted 61% in 2016. Major investments were made in transport and communications sector – 645 million USD, 39% of total foreign direct investments. Power sector ranks second with 203 million USD and development sector is third with 163 million USD. Finance sector comes fourth with 136 million USD and processing industry is fifth with 120 million USD.

It should be noted that it is the third year transport and communications sectors are most important directions in Georgia. Power sector held leading positions in foreign direct investments in 2012-2013, but now the sector has moved to the second position. As to most unattractive sector for investors, agriculture and fishing rank first in this category in 2016. Last year FDI inflows to the sector marked only 10 million USD, down 5 million USD compared to 2015 and down 2 million USD compared to 2013-2014 indicators.

As to the fourth quarter of 2016, according to preliminary report, FDI inflows in the fourth quarter of 2016 constituted 330 million USD, up 23% compared to preliminary indicators of the fourth quarter of 2015 and up 1% compared to specified indicators of the same period.

Ratio of three major sectors (due to  FDI inflows) made up 75% in the fourth quarter of 2016. Major foreign direct investments were made in transport and communication sectors and the figure made up 128 million USD, 39% in total FDI inflows. Power sector ranks second with 63 million USD and development sector is third with 58 million USD.

Preliminary indicators of the first, second and third quarters of 2016 have been corrected due to policy developed by Geostat for examination of statistical information (Based on regular examination principle) as a result of specification of indicators by respondents/administrative sources. Specified indicators of 2016 will be published on August 15, 2017.

It is interesting that over past 3 years FDI inflows have exceeded 1.5 million USD and this is a radically improved tendency after 2012-2013 years, when investment inflows could not exceed 1 billion USD throughout the year. Despite improved situation in foreign direct investments, Georgia’s economic growth pace declines year after year, over the past 3 years. The figure dropped to 2.2% in 2016.

As a result, myths have failed as if 2 billion USD FDI inflows could grow state economy in two-digit figures. Naturally, foreign direct investments play important role in state economy development. At the same time, it is evident that only FDI inflows cannot ensure economic growth. It is more important in which sectors these investments are made and what is the volume of financial products.