Page 27 - GEORptNov19

$777mn. The volume of direct investments also decreased, as major transport projects were completed—but FDI still remains larger than the CA gap: $129mn in Q2 (down 56% y/y) and $786mn (down 48% y/y) in the rolling 12 months ending June. The figures are not much larger than the CA gap, but a coverage ratio of over 100% is plainly robust.
Gross international reserves in Georgia amounted to USD3,602.77mn as of September 2019, ​down from USD3,735.84mn in June but up from USD3,477.05mn in March, according to the National Bank of Georgia. Of which, foreign currency reserves made up the majority at USD3,406.27mn in September.
5.2​ FDI
Georgia - FDI 2012 2013 2014 2015 2016 2017 2018 Q1 Q2 2019 2019
FDI ($ mn)
1,022.9 1,039.2 1,813.7 1,729.1 1,650.3 1,962.6 1,265.2 286.1 187.0
FDI (% of GDP)
5.25 5.93 10.84 11.89 11.27 11.88 7.5
Source: Geostat, CEIC
Putting concerns about Georgian FDI in context
When a major infrastructure project ends, aggregate foreign investment can drop. That doesn’t mean the economy is heading south.
Flows of foreign direct investment into Georgia have fallen 54% in the first six months of 2019. This has made an attention-grabbing headline for several news outlets covering economic developments in the South Caucasus. But the stark drop in FDI does not mean Georgia’s economy is tanking.
Georgia’s attractiveness as an investment destination was given a huge boost by the series of radical economic reforms that followed 2003’s Rose Revolution. Over the next few years, Tbilisi improved the ease of doing business with tax reforms, deregulation, public sector reforms and privatization. What followed was a massive increase in foreign investment: FDI averaged less than $250mn between 2000 and 2004; in 2006 FDI jumped to $1.2bn. Between 2006 and 2018 FDI averaged more than $1.3bn every year.
A considerable share of the FDI over the past decade has come from
27​ GEORGIA Country Report​ November 2019 ​ ​www.intellinews.com