Georgia's Economic Relations with Ukraine and Russia

The war between Ukraine and Russia is economically damaging for Georgia, as our country has very close economic relations with both countries. Here are the examples:

Trade relations

Russia and Ukraine are one of the most important trade partners for Georgia. For example, in 2021, Georgia exported goods worth about 610 million US dollars from Georgia to Russia, and about 307 million US dollars to Ukraine. In total, in 2021, the share of goods exported to Russia and Ukraine in total exports is about 21%, which is quite a solid figure.

At the same time, the previous years were also active, more specifically, in 2017 the share of goods exported from Georgia to Russia and Ukraine in total exports was 19.1%, in 2018 - 18.3%, in 2019 - 19.7%. In 2020, the share of exports in the two countries in total exports was set at 19.8%.

As for imports, in 2021 $ 1.22 billion worth of goods were imported from Russia to Georgia, while the volume of imports from Ukraine amounted to $ 451 million. In total, in 2021, the share of imports from these two countries in total imports will be 14.6%. We should also pay attention to the fact that strategic products such as oil and oil products, wheat and meslin, as well as sunflower oil are imported to Georgia from Russia.

Obviously, if the war lasts a long time, Georgia may have to diversify its markets, both for export and import or in other words, to capture new markets.

money transfers

For Georgia today, remittances are one of the most important preconditions for self-preservation. It should be noted that the volume of remittances from Russia is quite high. For example, in 2021, Georgia received about $ 2.350 billion in remittances. About $ 411 million of these remittances come from Russia, while about $ 93 million were transferred from Ukraine last year in the form of remittances. In other words, it turns out that Georgia received more than $ 500 million in remittances from these two countries in 2021, which is about 21% of the total remittances. This is a pretty solid figure.

Foreign investment

As for the volume of investments, it should be noted that the volume of investments in Georgia from these countries is quite low, which will not have a significant impact on our economy. For example, in the first nine months of 2021, $ 299 million in foreign investment flowed into Georgia, of which Ukraine and Russia totaled only $ 15 million. There was a similar low intensity in previous years, more specifically, in 2017 the share of foreign investment in Russia and Ukraine in the total FDI was only 2.9%, in 2018 5.8%, in 2019 6.1%, and in 2020 from Russia and Ukraine Investments in Georgia The share of total investments was 9.7%. The trend is upward, though its importance is still low. The impact of the war is likely to be indirect, in particular, given the escalation in the region, the countries here will be unattractive for investment.

Source: BPN