Page 32 - GEORptJul22

Foreign direct investment in Georgia in Q1 increased by 4.3 times
Georgia Q4 FDI up to $411.3mn
Georgia FDI remains subdued
Foreign direct investment in Georgia in the first quarter of 2022 amounted to $568.2mn, which is $435.7mn more than in the same period last year, the National Statistics Agency reported, citing preliminary data. Thus, the figure increased by 4.3 times.
The largest investor was Spain - $196.1mn (34.5% of foreign direct investment), the second place was taken by the United Kingdom with $87.2mn (15.3%), and Turkey was third with $67.1mn (11.8 %). In the first quarter, the main foreign direct investment was invested in the energy sector - $236.4mn (41.6% of all investments), the financial sector - $111.1mn (19.5%), real estate - $81.3mn (14.3% ).
Foreign direct investment in Georgia reached $411.3mn in Q4 2021, a rise from $303.8mn last quarter and a decline of $134.2 a year ago, according to new data released by Geostat.
The United Kingdom was the top contributor to FDI, investing $60.9mn in Q3 2021 (20.4% of the total). Netherlands was second with $59.8mn (20.0%), followed by Czech Republic with $36.0mn (12.0%). The largest share of FDI was registered in the financial sector, with $87.1mn (29.1% of the total). The energy sector was second with $69.3mn (23.2%), followed by the manufacturing sector with $54.8mn (18.3%). Also of note was FDI registering a positive figure in hotels and restaurants in Q3 for the first time in a year with $6.9mn, following catastrophic losses last year which totaled -$249mn.
Foreign direct investment to Georgia slightly recovered from the subdued levels in 2020, rising close to $300mn in the second and the third quarters of 2021, but, overall, it remains at a comparatively low level of 3.6% of GDP ($594mn) in the rolling four quarters as of the end of September.
Detailed data revealed by the statistics office Geostat suggest that a large part of the FDI was actually retained earnings generated by the two major banks TBC and Bank of Georgia, controlled by UK-registered holdings. In the second quarter alone, the overall FDI was revised upwards by $64mn as the result of supplementary profits reported by “the financial sector”.
In 2019, before the crisis, the FDI reached $1.34bn, or 7.% of GDP.
Furthermore, most of the FDI in recent quarters was generated by reinvested earnings, as opposed to new equity investments. Thus, the equity investments accounted for minus 25% of the total FDI in the last four quarters as of September and only $17mn in Q3. More precisely, the foreign investors have reduced their equity contribution in the Georgian companies.
In contrast, the reinvested earnings – namely, profits generated by existing FDI companies and not distributed as dividends – accounted for 125% of the FDI for the period.
32 GEORGIA Country Report July 2022 www.intellinews.com