Page 6 - GEORptOct22

March 2021 by a total of 300 bps. The bank said that "inflationary pressures remain quite high both in Georgia and in the rest of the world", and added that international sanctions imposed on Russia in connection with the invasion of Ukraine and additional disruption to supply chains made food, raw materials and energy resources much more expensive in the world markets.
The unemployment in Georgia fell to 18% in Q2, according to Geostat.
The number of hired employed increased by over 4.4%, reaching 867,900 individuals.
In trade and transport related news, the Trans-Caspian International Transport Route (TITR) is gaining importance as trade through its member states is growing amid the necessity for more trade route volume that bypasses heavily sanctioned Russia. Money inflows could last longer than initially expected, and Georgia could benefit from some trade diversion as transport corridors are reconfigured.
Prime Minister Irakli Garibashvili said the profit of Georgian Railways had hit a "record high" of GEL161mn ($59 mn) in the first half of the year. During the August 15 cabinet meeting, the prime minister announced that the increased freight traffic through Georgia had increased revenues for the company.
In January-July, exports grew by 36% y/y in nominal terms. Merchandise exports growth was driven by both increased demand for key commodities (copper ore, ferroalloys, nitrogen fertilisers) and higher prices. Imports expanded by 34% y/y, leading to the widening of the trade deficit by 33% y/y. This has been partly compensated by the recovery in tourism arrivals and a surge in net volume of money transfers (69% y/y) driven by inflows from Russia.
Foreign direct investment in Georgia amounted to $351.8mn in Q2, a 9.1% y/y. According to the statistics service, the expansion is mostly due to a rise in allowed capital and reinvestment indicators.
The United Kingdom ranks first in terms of investment in the country, with $64.7mn. The largest share of foreign direct investment was $76.6mn, which fell on the energy sector.
In Georgia, revenues from international visitors are running at a record high in 2022. According to the National Bank of Georgia, the country received $476mn in income from international visitors in July, which is almost $270mn more y/y. For the first time after the pandemic, the revenue from travel in January-July exceeded $1.6bn, constituting 87.4% of the figures for 2019.
Money transfers from Russia to Georgia soared 6.5 times in Q2 to $678mn, equivalent to 3.6% of the country’s GDP recorded last year, the National Bank of Georgia (BNM) reported. The spike in financial flows can safely be attributed to the flow of migrants from Russia who have found at least temporary shelter in Georgia from consequences of the Ukraine war. The macroeconomic impact made by financial flows of such a magnitude cannot be ignored. It should be seen in retail sales, GDP growth and exchange rate.
Georgian plans to reduce its foreign debt to 40% of gross domestic product (GDP), PM Garibashvili said during the cabinet meeting on September 13. The budget deficit is also expected to go down to 3.2% of
6 GEORGIA Country Report October 2022 www.intellinews.com