Among the countries of the post-Soviet space and Europe, Georgia is one of the most dynamically developing economies. It has become a leading player in the tourism and construction sectors. Our task is to find out what are the success factors and how long-term they will be.
Fact# 1. Georgia has a leading position in the world rankings in terms of ease of doing business and economic freedom.
Year after year, the country ranks high in various rankings ranging from the best airports to the most attractive business destinations. Here are a few examples that demonstrate Georgia’s strong leadership in industries that are essential to its continued economic prosperity.
⦁ Bloomberg Media — Georgia entered the top 15 countries in the international rating of investment attractiveness. It highlights Georgia as one of the most popular destinations for investment.
⦁ World Travel Awards – Batumi is recognized as the best fast-growing tourist destination in Europe in 2019 and 2022.
⦁ Sustainable Competitiveness Index World Map is a global index of sustainable competitiveness. In 2022, Georgia ranked 65th among 180 countries.
⦁ Global Law and Order – ranking of global security and law and order among 142 countries. Georgia scored 86 points in 2021. Canada, Great Britain and Greece have the same number. For comparison, Singapore ranks first with 96 points.
⦁ World Health Organization – Georgia has entered the top of the safest countries for women in 2022, and this is one of the important factors that attract tourists and expats to the country. Visitors like that you can walk along the street at night, without fear of turning to passers-by and the police for help.
⦁ Doing business from the World Bank (was abolished in 2021) – seventh place out of 190 countries in the ranking. The evaluation was based on ten indicators. Georgia has the highest scores for ease of starting a business, registering real estate and protecting investors.
⦁ Paying Taxes is a joint study by the World Bank and PwC that compared the taxation of 190 countries. Georgia took 14th place. The study notes that Georgia and Italy are the best examples of progress in tax mobilization.
Fact #2. Georgia’s GDP growth rate continues to increase every year.
Economic growth in Georgia continues to gain momentum. According to the World Bank report, in 2022 the country’s economy grew by 10.1%. This was facilitated by remittances, the development of tourism and foreign investment in new projects.
The National Statistical Office of Georgia has published preliminary data on the gross domestic product for 2022. The total GDP amounted to 71.75 billion lari ($27.87 billion), with a nominal growth of 19.6% and real growth of 10.1%. In 2021, real GDP growth was slightly higher at 10.5%.
It is also worth noting that a significant share of the economy falls on real estate transactions, their share is 9.9%.
Economic growth in Georgia continues to gain momentum. According to the World Bank report, in 2022 the country’s economy grew by 10.1%. This was facilitated by remittances, the development of tourism and foreign investment in new projects.
The National Statistical Office of Georgia has published preliminary data on the gross domestic product for 2022. The total GDP amounted to 71.75 billion lari ($27.87 billion), with a nominal growth of 19.6% and real growth of 10.1%. In 2021, real GDP growth was slightly higher at 10.5%.
It is also worth noting that a significant share of the economy falls on real estate transactions, their share is 9.9%.
In 2022, Georgia posted one of the highest GDP growth rates in the world, especially in the context of the global crisis, when the European Union’s GDP increased by only 0.5%, while some countries, such as Latvia, Lithuania and Portugal, faced negative growth. According to IMF estimates, Georgia ranked first in the Eastern Hemisphere and second in the world in terms of per capita GDP growth.
The IMF predicts that Georgia’s economic development will reach 4% in 2023 and 5% in 2024. The World Bank also raised its forecasts for Georgia’s GDP in 2023 from 4% to 4.4%. Initially, this forecast was expected to require adjustment as growth continues. In the first two months of 2023, the economic activity of the country was 7.1%.
Concerns that the growth of the economy is due to the influx of Russian citizens due to the conflict in Ukraine turned out to be unfounded. In fact, most of the mobilization arrivals have already left the country or traveled elsewhere, with only a minor impact on the economy. Other Russian citizens have chosen Georgia as their permanent residence and are having a positive impact on the country.
According to the CEO of TBC bank, Vakhtang Butskhrikidze, and according to local media reports, about half of the incoming Russian citizens work in the IT sector. They make up an affluent and active segment of the population with business ideas. They stimulate consumption, create new projects and jobs.
Many startups from Russia even moved their business to Georgia in order to keep the influx of investments by re-registering it. This is due to preferential terms for IT companies, as they are exempt from taxes for a year and do not pay export duties on software.
Fact #3. The rate of inflow of foreign investment into the country continues to increase.
The volume of foreign direct investment in Georgia in 2022 almost increased by one and a half times, amounting to $2 billion, according to the National Statistics Service. These figures exceeded even the pre-pandemic level in 2019 ($1.3 billion).
In 2022, the bulk of investments were directed to the real estate sector. In the third quarter, the largest volumes of investments in this sector were made by investors from Spain, Great Britain, Ireland and the USA.
Fact#4. The flow of tourists is constantly growing
In the first quarter of 2023, even before the start of the tourist season, the number of tourists visiting Georgia reached 1.2 million. This is an increase of 110% over the same period last year. In total, 5.4 million tourists visited Georgia in 2022, and revenue from the tourism industry amounted to $3.5 billion, exceeding the figures for the pre-Covid 2019, when the budget received $3.2 billion. 3.9 million tourists visited Adjara in 2022 alone, and it is expected that in two years their number will be about 6 million.
The data of the National Tourism Administration on budget revenues from the tourism industry for the first quarter of 2023 has been published. They exceed the figures for 2022 by 102% and amount to $795 million. There is also a significant increase compared to the same period of pre-COVID 2019 – by 37.5%.
The table below clearly shows the excess of tourism revenue in the first quarter of 2023 compared to previous years.
Fact #5. New airlines and routes
The development of tourism has a significant impact on air travel. The Ministry of Economy and Sustainable Development of Georgia, the Civil Aviation Agency analyzed the results of 2022 and concluded that almost 4.5 million passengers were served at Georgian airports, which is 78% more than in 2021. The recovery of air traffic compared to the period before the 2019 pandemic was 85%.
During the year, 21 thousand flights were carried out in Georgia, which is an increase of 43%. There are nine new routes and ten new airlines. Record recovery results compared to 2019 were recorded at Batumi Airport – 99%. Tbilisi, Batumi and Kutaisi airports were included in the top ten Eastern European airports according to the World Airport Awards 2023.
The flight schedule for the summer season of 2023, which will last until October 28, includes 43 airlines and 88 destinations to Europe and the Gulf countries. This includes 31 states.
Below are some of the changes:
⦁ Return of the Irish low-cost airline Ryanair;
⦁ Azerbaijani airline Buta Airways has planned direct flights from Baku to Batumi;
⦁ Air Moldova has added a new regular flight;
⦁ China Air Lines will operate flights between China and Tbilisi, Batumi;
⦁ Uzbek airline Centrum Air starts direct charter flights on the route Tashkent – Tbilisi from May 13;
⦁ The Greek airline Aegean Airlines opens the air route Thessaloniki – Tbilisi – Thessaloniki from May 22 to October 5;
⦁ In May 2023, direct flights with Russia were restored;
⦁ It is planned to increase the frequency of flights between Dubai and Batumi.
⦁ Georgia continues to receive requests from airlines for additional regular and seasonal charter flights.
Fact #6. The real estate market continues to grow
Foreigners arriving from different countries of the world are actively acquiring real estate in Georgia. Over the past 15 months, they have bought more than 20,000 apartments in this country, with 15,000 transactions completed in 2022. The leaders among buyers are citizens of Russia, who made 6,062 transactions, followed by Israel (1,892) and Ukraine (1,321). In the first quarter of 2023 alone, foreigners concluded 5,000 sales contracts, while citizens of Russia, Israel, Iran, Turkey, Belarus and Ukraine continue to occupy leading positions in the number of transactions.
In the first quarter of 2023, home sales in Batumi grew by 40% year on year, according to a report by Colliers Georgia. During this period, 4.2 thousand residential properties were sold in the capital of Adjara. Especially high is the demand for the elite segment, where the demand for such real estate has increased by 188%.
It is noteworthy that already in January 2023, the demand for premium new buildings increased by as much as 339%, according to the Colliers Georgia portal. In total, 1,330 residential real estate transactions were registered in Batumi this month, which is 75% more than in the same month in 2022. The total market volume increased by 98% and reached $58 million.
