Georgia: Economic and Political Outline
Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline
Georgia has an economy in transition, influenced by all the years of Soviet domination. Its relationships with its Caucasian neighbors, especially Russia, are sometimes sources of instability, as it was shown by the conflict in August 2008 in South Ossetia and in Abkhazia, which had a negative impact on economic growth and continues to hinder foreign investment, despite the strong support of the international community. Georgia's growth and economic attractiveness, which relies largely on foreign investment, have been challenged by the conflict with Russia and later by the international economic crisis.
The (fiscal and privatisation) reforms which were introduced by the government have contributed to the creation of an environment favorable to economic development and make Georgia one of the most advanced countries in terms of the current transition in the region. The government actively seeks to attract international investors offering appealing tax and legal advantages. The energy and banking sectors are now completely privatised.
Georgia has a promising tertiary economy, but it is strongly dependent on its political sphere. With a growth of 5.5% in 2011, the country has confirmed that it has come out of the recession of 2008-2009 (-4% in 2009). As a sign of a better control over the public finances, the budget deficit has been lowered from 6.6% of the GDP in 2010 to 3.7% in 2011.
The main challenge remains the reduction of poverty, which still affects about a third of the population.
| Main Indicators | 2009 | 2010 | 2011 | 2012 (e) | 2013 (e) |
| GDP (billions USD) | 10.77 | 11.67e | 13.84e | 14.92 | 15.28 |
| GDP (Constant Prices, Annual % Change) | -3.8 | 6.4 | 5.5e | 5.2 | 5.0 |
| GDP per Capita (USD) | 2,455e | 2,629e | 3,098e | 3,358 | 3,460 |
| General Government Gross Debt (in % of GDP) | 37.3 | 39.1e | 36.8 | 38.0 | 38.2 |
| Inflation Rate (%) | 1.7 | 7.1e | 9.6e | 5.0 | 5.0 |
| Unemployment Rate (% of the Labor Force) | 16.9 | 16.3 | 16.2 | 16.0 | 16.0 |
| Current Account (billions USD) | -1.21 | -1.12e | -1.49e | -1.37 | -1.19 |
| Current Account (in % of GDP) | -11.2 | -9.6e | -10.8 | -7.8 | - |
Source: IMF - World Economic Outlook Database ; World Bank , Last Available Data
Note: (e) Estimated Data
Agriculture contributes nearly 10% to the GDP but the yield is very low. The main agricultural products are wheat, corn, barley, potatoes, citrus fruits and other fruits, tobacco, wine grapes and rice.
Georgia is rich in minerals, especially manganese (mined mainly in Chiatura and Imeritia), copper, tungsten, marble, and oil. Even though Georgia has abundant hydroelectric energy, it needs to import a significant volume of its fuel. The construction of an oil pipeline from the Caspian Sea to the center of the Black Sea at Supsa (in Georgia) is going to attract substantial foreign investment.
The industrial sector is less developed and includes mainly food processing in full expansion, manufacturing of transport equipment, electric motors, iron, steel, aircraft, chemical products and textiles. The industrial and mining sectors contribute up to 24% to the GDP.
The most dynamic sector is the services sector (particularly hotels, restaurants, transport and telecommunications), which contributes more than 66% to the GDP. Several beach resorts and spas that attract large numbers of tourists can be found along the Black Sea. Tourism is one of the government's priorities with the development of infrastructures in the coastal area of Adjara and ski stations in Svaneti.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 53.4 | 10.4 | 36.0 |
| Value Added (in % of GDP) | 9.8 | 21.0 | 69.2 |
| Value Added (Annual % Change) | 1.0 | -5.0 | 10.7 |
Source: World Bank - Last Available Data.
| Monetary Indicators | 2006 | 2007 | 2008 | 2009 | 2010 |
| Georgian Lari (GEL) - Average Annual Exchange Rate For 1 USD | 1.78 | 1.67 | 1.49 | 1.67 | 1.78 |
Source: World Bank - Last Available Data.
Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation
Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
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Georgia is very open to international trade. It maintains no currency controls, allows foreign investment in almost all sectors and has implemented an impressive privatization plan, particularly in the allocation of land. The share of foreign trade is nearly 90%. Georgia was the second former Soviet Union country to join the WTO.
Since the embargo imposed by Russia on certain food products, the two countries have ceased all trading with each other. The embargo has weakened the agricultural sector, which represents 10% of the GDP.
Turkey has replaced Russia as the country's largest trading partner. Its three main export partners are Turkey (20% of exports), Azerbaijan and Canada. 20% of exports go to the EU. Georgia exports mainly iron and steel, wine, aircrafts, fruits and hazelnuts.
The main import commodities are mineral fuels, oil, vehicles, nuclear reactors and boilers, electronic equipment and pharmaceutical products. Its main suppliers are Turkey, Ukraine and Azerbaijan. The EU countries contribute to more than 30% of the country's imports. Its trade balance is traditionally negative.
| Foreign Trade Indicators | 2007 | 2008 | 2009 | 2010 | 2011 |
| Imports of Goods (million USD) | 5,215 | 6,302 | 4,366 | 5,097 | 7,058 |
| Exports of Goods (million USD) | 1,232 | 1,495 | 1,134 | 1,580 | 2,189 |
| Imports of Services (million USD) | 872 | 1,156 | 910 | 996 | 1,202 |
| Exports of Services (million USD) | 976 | 1,157 | 1,225 | 1,514 | 1,949 |
| Imports of Goods and Services (in % of GDP) | 58.0 | 58.4 | 48.9 | 53.0 | - |
| Exports of Goods and Services (in % of GDP) | 31.2 | 28.6 | 29.5 | 33.8 | - |
| Trade Balance (million USD) | -2,896 | -3,836 | -2,399 | -2,572 | - |
| Trade Balance (Including Service) (million USD) | -2,735 | -3,815 | -2,059 | -2,038 | - |
| Foreign Trade (in % of GDP) | 89.2 | 87.0 | 78.4 | 86.9 | - |
Source: WTO - World Trade Organization ; World Bank , Last Available Data
| Main Customers (% of Exports) |
2010 |
| Azerbaijan | 15.4% |
| Turkey | 13.6% |
| United States | 11.4% |
| Armenia | 10.1% |
| Ukraine | 6.5% |
| See More Countries | 42.9% |
| Main Suppliers (% of Imports) |
2010 |
| Turkey | 17.3% |
| Ukraine | 10.9% |
| Azerbaijan | 9.1% |
| China | 6.5% |
| Germany | 6.5% |
| See More Countries | 49.6% |
Source: Comtrade, Last Available Data
Source: Comtrade, Last Available Data
Source: Worldwide Press Freedom Index 2011, Reporters Without Borders
Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
Map of freedom 2010
Source: Freedom House
Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
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Last Updates: May 2012