Page 43 - GEORptAug19

Economics of Russia’s ban on tourism in Georgia
by reports that a Russian lawmaker was giving a speech from the speaker’s chair inside the parliament. Russian President Vladimir Putin said the temporary ban, which came into force on July 8, was “to protect Russian citizens from violence or other illegal actions.”
“Russia's recent decision to ban flights to Georgia is unjustified and disproportionate,” Tusk said at a joint briefing with Georgian President Salome Zurabishvili during the 16th Batumi International Conference.
“But your country has weathered external pressure before and will do so again this time. The EU stands with Georgia in solidarity and with full commitment to your sovereignty and territorial integrity.”
Moscow’s ban disrupted the holiday plans of hundreds of Russians, while airlines from nearby states such as Armenia and Turkey have started putting on transit flights linking cities in Russia and Georgia indirectly.
Russians account for some 20% of foreign tourists who arrive in Georgia (1.2mn visitors, 1.4mn visits) and tourism brings important revenues to Georgia ($3.2bn in 2018 as part of GDP of $16bn) that offset an important part of the net import of goods. But concluding that tourism revenues make such a big GDP contribution is not entirely justified. Over 50% of visitors arriving in Georgia state that they are visiting to meet friends and relatives, while less than 10% declare tourism as the entire scope of visit - therefore the distribution by nationality of this minority of tourists can be very different from the overall distribution. Then, as Klintsevich comments in its post, Russian tourists bring smaller revenues per capita compared to Western tourists and the diversification of the country's tourism industry might bring a lot of benefits. Notably, Russia decided on a ban on tourism and not on trade with goods with Georgia. This might be because Georgia does not use Russian natural gas (on the contrary, it helps Russia transfer gas to other countries) and Russia is for Georgia a net exporter of goods (some $430mn in net exports in 2018) that can be easily sourced by Georgia from other countries.
The number of international tourists visiting Georgia moved up by 2.2% y/y to 882,130 in Q1, according to the Georgian National Tourism Administration (GNTA).
The total number of tourists, including Georgians, rose by 5.2% y/y to 1,617,548 in the period.
Georgia markets itself as a “new destination” in international tourism.
With 114.6% more travellers than in 2018, Israel saw the biggest increase in visitors to Georgia followed by China (+59.3%) and Saudi Arabia (+52.8%).
As regards visitors arriving from the European Union, more tourists particularly came from Latvia, Slovakia, the Czech Republic, Poland, Lithuania and Germany.
In January and February this year, tourism, an important part of Georgia’s battle against its current account deficit, brought revenues of $333.7mn to the country, up 4.7% y/y.
9.1.5 Infrastructure and construction sector news
Georgia’s Anaklia Development Consortium (ADC) has selected Eiffage Europe as general contractor for the first phase of its planned $2.5bn deep sea port project on the Black Sea coast, according to Georgia Today . Eiffage will carry out construction works with partner companies, in particular Swiss ABB and Georgian CRP, ADC reportedly said.
The international tender for selecting the general contractor was held in
43 GEORGIA Country Report August 2019 www.intellinews.com