Posted: 3 years ago

Reasons Behind the Slowdown in the Imports of Main Products

In the first quarter of 2019, the period from January to March, Georgia’s imports made up 2 billion USD, down 4.7% year on year (-100 million USD).

The  slowdown was recorded in March – 105 million USD. Imports declined as a result of a contraction in main products: oil products (mainly, vehicle fuel) declined by 37 million USD, imports of computers and computer parts decreased by 26 million USD, imports of manganese ores and concentrates shrank by 13 million USD, sugar imports declined by 8 million USD, cigarette imports decreased by 7 million USD, phone imports plunged by 6 million USD, and grain imports decreased by 5 million USD.

The Caucasus Business Week (CBW) has inquired as to why imports of main products have declined.

Vano Mtvralashvili, head of Union of Oil Products Importers, explains that the first quarter of 2019 recorded a year on year contraction in diesel imports, after the supply of diesel from Georgia to Turkey shrank.

“At the same time, we should also note that fuel consumption in 2019 will be affected by such factors as the growth in hybrid vehicles to Georgia”, Mtvralashvili said.

According to him, in 2017, the country imported 16,471 hybrid vehicles, in and 2018,  25,554 hybrid vehicles. We expect this figure to increase in 2019.  Mtvralashvili explained that a growth in the import of hybrid vehicles has essentially reduced the consumption of natural gas.

Periodic technical inspections also affect fuel imports and consumption. As a result, he added, a lot of vehicles were halted.

In January-March 2019, a total of 249,019 vehicles were inspected. A total of  136,277 vehicles turned out in order, 112 068 vehicles did not report to  the inspection, and 4,955 vehicles failed a repeat inspection.

In March, imports of oil products (petrol and diesel) made up 69.6 thousand tons, down 14.9 thousand tons month on month (84.5 thousand tons), including petrol imports, which amounted to 37.4 thousand tons, and diesel imports constituted 32.2 thousand tons, Mtvralashvili said.

“In January-March 2019, imports of oil products to Georgia (petrol and diesel) made up 232.6 thousand tons, down 9.9 thousand tons year on year (-4.3%). In January-March 2019, petrol imports constituted 134.9 thousand tons, and diesel imports made up 97.6 thousand tons.

According to fuel categories, in the first quarter of 2019, Georgia’s petrol imports made up: A-91 regular - 90.3 thousand tons (66.9%); A-95 – 42.9 thousand tons (31.7%); A-98 – 1.8 thousand tons (1.3%);

Ranked by countries, in March-January, the major volume of petrol and diesel was imported from Russia (69.9 thousand tons), which is 30% in total imports. Romania is second – 68.8 thousand tons (29.6%), Azerbaijan – 39.2 thousand tons (16.8%), Bulgaria – 27.9 thousand tons (11.9%); Turkmenistan – 16.4 thousand tons (7%); Greece – 10.3 thousand tons (4.4%); Switzerland – 0.09 thousand tons (0.03%).

 Levan Silagava, executive director of the Association of Grain and Flour Producers, says that grain imports declined after the product transportation scheme changed: “In December 2018, grain prices hiked after grain reserves in the country fell to a critical level. The majority of imports comes from Russia. The Larsi customs checkpoint does not have a high working capacity. Therefore, import volumes declined. The product was not transported by either ships or trains. Starting in January 2019, we took efforts to replenish our grain reserves by ships and railway. It is worth noting that this mechanism requires time. In the case of railage, it is necessary to order trains in advance. This process has not been finished yet, and that’s why imports have declined”, Silagava said.

Anzor Kokoladze, founder of the TechnoBoom network of home appliance stores, says that imports declined because of banking regulations. The sales fell by about 40%, he noted.

“The slowdown is reported in all directions, but in the case of computers, consumers also showed a change in behavior, that is, computers were replaced by smartphones”, Kokoladze said.

Guram Brodzeli, director of the Alpha sugar imports company noted that sugar imports declined because of seasonal factors. Namely, in January-March, the demand for sugar declined, and there were huge reserves of sugar from the previous quarter, Brodzeli said.