ეკონომიკური პროფილი (Jul 2023)
THE IMPACT OF FOREIGN TRADE TURNOVER AND EXPORT-IMPORT ON THE ECONOMY OF GEORGIA
Abstract
For two years in a row, the economy of Georgia has undoubtedly achieved good results in various directions of the national economy. The country has achieved double-digit economic growth, the volume of investments is increasing, the tourism sector has regained the positions lost due to the coronavirus and their number is increasing, and the GEL is strengthening intensively. The support of the Western partners is great in this. There is no alternative to European orientation for Georgia, but we must go through this path with as few losses as possible and efficiently. Against the background of the difficult situation created in the world, the increased risks, the Russia-Ukraine war, the stable economic growth of Georgia is clearly outstanding and provides a basis for solid optimism. At the same time, the strengthening of the lari in the recent period helped to slow down the inflation of imported goods. However, although the growth rate of nominal wages has increased recently, the total productivity has the dynamics of recovery, which means that at this stage there is no significant pressure on inflation from the labor market. The aggression shown by Russia towards Ukraine and the start of hostilities in the region have a significant impact on the economy of Georgia. The war started by Russia against Ukraine gave rise to new risks, in particular, the sanctions and supply restrictions imposed on Russia due to the hostilities significantly increased the prices of certain categories of goods on the world markets. Consequently, inflation has increased significantly in both developed and developing economies. The harmful influence of the Kremlin at the international level includes many aspects, in which, along with military and political, economic and informational directions are no less important. In the background of the aggressive invasion of the Russian Federation in Ukraine in February 2022 and the unprecedented package of sanctions imposed after the war, the economic aspect has acquired special importance. Among the relations between Russia and Europe, the energy issues came forward with particular intensity. In the recent period, significant positive changes have been made in the economic growth of Georgia, and in these positive changes, construction, financial and insurance activities, transport and warehousing and trade sectors. A special contribution was made by the field of foreign trade. According to him, trends in foreign trade and tourism contributed to economic growth. In particular, in the month of March 2023, we have an approximately 33 percent increase in exports. Georgia is convincingly increasing its export figures, although the country has better utilized its neighbors and is less represented in the western markets. Besides, a large share in the statistics is re-export, i.e. products imported from other countries and then exported from there. Compared to the previous years, the recent growth is in the direction of net exports, but the economics of these indicators show that more can be done in this direction. In January-March of this year, the volume of goods exported from Georgia amounted to $1.5 billion, which is 24.7% more than the corresponding period last year. Local exports (exports without re-exports) make up 52.4% of total exports. This indicator decreased by 13.5% compared to the corresponding period of the previous year and equaled $766.3 million. Along with net exports, the growth of re-exports is also important, because at this time Georgia leaves the role and impression of a reliable partner. Exports have increased, although the indicator has increased mainly at the expense of re-exports. Increasing re-exports means that our trade partners, harmless and not so direct land neighbors, show a certain interest and, most importantly, trust in Georgia. In this regard, our country leaves the role and impression of a reliable partner. Georgia is more actively represented in the neighborhood than in Western countries. Western markets mean EU and America. Of course, we have growth in this direction, but it is desirable to be represented in these markets with higher figures, because they are characterized by a fairly high purchasing power and payment capacity. This requires high quality, safety and price. Net exports, which are very important for the country, have declined relatively, although the figure is better than in previous periods. Local exports make up 54.3 percent of total exports. The mentioned indicator decreased by 10.6% compared to the corresponding period of the previous year and equaled 497.2 million US dollars. -We expect that the positive trend in terms of economic growth will continue in the coming period as well, and we will be able to ensure higher economic growth than was predicted at the beginning of the year, including by international financial institutions. The positive trends and high economic growth observed in the Georgian economy clearly indicate that despite external shocks, geopolitical tensions and challenges, the Georgian economy maintains its stability.
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