Georgia Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

According to information on the website of the EU Delegation Tbilisi, the EU is Georgia’s largest trading partner. This is the case if we consider the EU as one of the bilateral partners. If we look at the EU as a group of states, as Geostat states in its statistics, we get a somewhat different picture. According to Geostat, Georgia’s exports to the EU in 2021 accounted for 16.9% of the total volume, while exports to CIS countries accounted for 47.6%. Imports from the EU accounted for 22.9% and from CIS countries 28.1%. The most important export commodity from the EU was machinery and means of transport, the EU also imports other minerals from Georgia.

  • Allcountrylist: Overview of major industries in Georgia, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 1,905.90 2,045.30 2,011.50 1,587.30 2,036.90
Imports into the EU (million EUR) 652.5 633.7 655.1 762.6 811.7
Balance with the EU (million EUR) -1,253.5 -1,411.6 -1,356.5 -824.7 -1,225.3

Source: European Commission

Trade relations with the Czech Republic

Mutual trade with Georgia recorded a record volume of almost CZK 3 billion in 2021, which means year-on-year growth of 19%, while Czech exports to Georgia increased by 26.9% and imports from Georgia decreased by 2.5%. From the available statistical data for January-March 2022, the continuing growing trend of Czech exports and the stabilized trend of imports from Georgia are evident. The most important export commodity from the Czech Republic is mobile phones, clothes, fruit and nuts are imported from Georgia to the Czech Republic.

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 0.4 2.1 2.2 1.9 2.3
Imports to the Czech Republic (billion CZK) 2 0.5 0.6 0.7 0.6
Balance with the Czech Republic (billion CZK) 2 -1.5 -1.6 -1.2 -1.7

Source: CZSO

Trade relations with countries outside the EU

The most important export partners of Georgia in 2021 were non-European countries: China ($61million), Russia ($610.0 million), Azerbaijan ($53million), Turkey ($32million) and Ukraine ($307.3 million). For all named countries, there was a year-on-year increase in exports in the range of 20.5% to 69.1%. Copper ores and concentrates ($81million, 4.7%), ferrous alloys ($477.4 million, 93%) and motor vehicles ($45million, 13%) accounted for the largest share of exports.

The largest volumes of imports to Georgia also come from non-European countries: Turkey (USD 1,82million), Russia (USD 1,028.6 million), China (USD 86million), USA (USD 62million). USD) and Azerbaijan (USD 60million). The most significant import commodities were motor vehicles ($898.8 million, 15%), petroleum and petroleum oils ($82 million, 65%) and copper ores and concentrates ($73million, 26.4%) ).

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 413.8 807.3 1 189.6 1,226.2 1,771.1
Imports to countries outside the EU (million EUR) 6,128.8 7 131.9 7,254.8 6,082.0 7,786.1
Balance with non-EU countries (million EUR) -5,715.1 -6,324.6 -6,065.2 -4,855.8 -6,015.0

Source: EIU, Eurostat

Foreign direct investment

There are several reasons to invest in Georgia – geographic location, natural resources, ease of doing business, low taxes, growing economy, skilled and competitive workforce, government stimulus programs and free trade agreements. In addition, the country ranks high in international rankings due to its economic policies.

In 2021, foreign direct investment in Georgia reached 1.153 billion USD and increased by 102% compared to the same period in 2020. The largest share of FDI was allocated to the financial sector (USD 443 million), entertainment, recreation and other services (USD 231 million), energy (USD 157 million). The most important investors were the United Kingdom (51.8%), the Netherlands (10.9%), the Czech Republic (7.1%), Turkey (5.6%) 5. Russia (5.1%).

In 2021, FDI allocated from the Czech Republic to Georgia amounted to USD 82 million. The main sectors were energy, real estate, trade, transport and manufacturing. The most important Czech investor in Georgia is Energo-Pro. In addition to energy, the real estate market, manufacturing industry, agriculture and special financial zones offer potentially interesting investment opportunities.

FTAs and treaties

Treaties with the EU

On June 27, 2014, in Brussels, Georgia signed an Association Agreement with the EU, which includes the Deep and Comprehensive Free Trade Area Agreement (DCFTA), which entered into force on July 1, 2016. From this date, the export of Georgian products to the EU markets is not burdened by any customs and Georgian products must meet European standards. The process of setting the appropriate standards for local companies is still ongoing. Although the volume of mutual trade has been increasing since 2016, the share of the EU in both Georgian exports and imports has been steadily decreasing since 2016. The recent fulfillment of strict conditions for the export of honey and fish to the EU can be considered a success. In an effort to speed up the European integration reform processes, the Georgian government presented an extensive document “Roadmap2EU” in February 2019. However, the implementation process was significantly affected by the coronavirus pandemic. However, the program statement of the current government contains the intention to file in

Contracts with the Czech Republic

The most important treaties and agreements that help the development of trade relations between the Czech Republic and Georgia include the treaty on the avoidance of double taxation and the agreement on the support and protection of investments. In 2013, an agreement on economic cooperation was signed. Selected contracts:

  • Agreement between the Ministry of Defense of the Czech Republic and the Ministry of Defense of Georgia on cooperation in the military field, Prague, 18 May 1999. Entry into force: 24/09/2001;
  • Agreement between the government of the Czech Republic and the executive body of Georgia on the prevention of double taxation and the prevention of tax evasion in the field of income and property taxes, Tbilisi, 23/05/2006. Entry into force: 04/05/2007;
  • Treaty between the Czech Republic and Georgia on the exchange and mutual protection of classified information Prague, 22.01.2009, Entry into force: 16.10.2009;
  • Agreement between the Czech Republic and Georgia on the support and mutual protection of investments, Tbilisi, 29/08/2009. Entry into force: 13/03/2011;
  • Agreement between the government of the Czech Republic and the government of Georgia on air services, Tbilisi, 08.11.2010. Entry into force: 28/11/2011;
  • Agreement between the government of the Czech Republic and the government of Georgia on economic and industrial cooperation, Tbilisi, 10 April 2013. Entry into force: 01.10.2013.

Developmental cooperation

Georgia is a net recipient of development aid and is among upper middle-income countries. Substantial development aid flows to Georgia from the World Bank, the European Investment Bank (EIB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), the International Monetary Fund (IMF), the EU, the US and other bilateral donors. Georgia is one of the six priority countries in the system of development cooperation (ZRS) of the Czech Republic. Starting in 2018, the activities of the ZRS of the Czech Republic in Georgia are governed by the Bilateral Development Cooperation Program valid until 2023. In Georgia, the Czech Republic mainly supports the inclusive social development of all population groups, agriculture and sustainable rural development, landscape protection, food self-sufficiency and proper administration of public affairs. In 2021, the Czech Development Agency and the Ministry of Foreign Affairs of the Czech Republic implemented bilateral development projects in Georgia with a total value of 8million. CZK. For their entry into the Georgian market, Czech companies can use the ZRS Guarantee program, thanks to which they obtain loan guarantees to finance investments with a clear and sustainable development impact (e.g. creation of jobs, introduction of more environmentally friendly technology, etc.).

Prospective fields of study (MOP)

As a developing economy, Georgia is dependent on imports of technology, equipment and materials necessary for economic development. This applies both to the renewal and modernization of infrastructure, agricultural production and the defense sector, as well as to the provision of health and social care. It is also dependent on the import of consumer goods, including sports equipment.

Agricultural and food industry

Through several programs, the Georgian government is actively trying to increase agricultural production, thereby reducing dependence on imports, and at the same time increasing exports of its own agricultural products. In 2021, state support for the agricultural sector reached CZK billion. Demand for cold storage, processing lines, packaging and agricultural machinery is growing. There is still demand for animal feed compounds, preserved meats, cured meats, malt and hops, hydrogenated vegetable fats and oils.

Healthcare and pharmaceutical industry

In 2020, the State Healthcare Holding was founded, which should merge up to 20 hospitals in the coming years, most of which need reconstruction and new equipment. On the other hand, in Georgia there is a wide network of private health facilities (they provide 85% of health care), which have the funds to purchase equipment. There is also potential for the import of medicinal products, which will grow by an average of 7.5% in 2012-2021 and make up 5% of Georgia’s total imports.

Transport industry and infrastructure

One of the fastest growing regions in Georgia, accounting for 6% of GDP. The Georgian government therefore intends to build logistics centers and is ready not only to act as a partner in the framework of a public-private partnership in the initial phase of development, but to support the operation of these centers in the long term. The government is also continuing to improve railway infrastructure and port development. The priority of large cities remains the improvement of transport infrastructure through the purchase of ecological means of transport.

Defense industry

Despite the rather problematic deliveries in this sector so far, the defense industry remains interesting for Czech exporters, because building a strong and resilient army is a government priority. The budget of the Ministry of Defense in 2022 accounts for 5% of the total state budget and 2% of GDP. Czech products in the defense sector traditionally have a good reputation in Georgia, and after the Nagorno-Karabakh war, their reputation grew even more. In Georgia, the experience of the Czech defense industry in transitioning from post-Soviet technology to NATO-compatible technology can be well utilized.

Entertainment and leisure

During the Covid-19 pandemic, part of the population of the capital Tbilisi, where 40% of the total population lives, began to change their lifestyle and became more and more interested in sports. Imports of bicycles increased significantly (by 50%) during the pandemic, and imports of ski equipment and equipment for other sports have been increasing in recent years. Although new sports shops are gradually opening, the offer of sports equipment and clothing is limited.

Georgia Trade