Page 18 - Small Stans and Causcasus Outlook 2022

2.1.2 External environment

Georgia’s current account deficit is shrinking after it exploded in 2020
as tourism revenues plunged. Again, the improvement in 2022 depends
on tourism activity. Metal prices helped the country’s external balance in
2021 and this is likely to continue in 2022 as well. This advantage is
offset however by the country’s position as a net importer of energy –
another commodity that is becoming increasingly expensive as well.
Investments in processing of raw materials (metals) and energy
generation are key for both external balance and economic
development.

In January-October 2021, the country’s exports rose by 24.9% y/y (to
$3.39bn) and by 11% compared to the same period of 2019.

Indeed exports boasted robust growth this year, but imports increased
significantly as well in January-October: by 22.3% y/y (to $7.96bn, more
than double the exports) and indeed by only 3% compared to the same
period of 2019.

Detailed data available as of September reveals that even if the biggest
contribution to the domestic exports in January-September (+26% y/y,
to $2.17bn) was made by ferro-alloys (+76% to $316mn) – which rose
on higher prices – many other industries, mainly food processing and
light industries, contributed as well.

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