Georgia’s GDP per capita is 4068 US dollars in 2018.
Georgia has achieved average annual growth of 4.5% over the past decade. It weathered the 2008 financial crisis particularly well, as well as the five-day conflict with Russia in August 2008.
The agricultural sector alone accounts for 50% of the workforce, yet contributes only 9% of GDP. This means that revenues are low in this sector, with added value that needs to be improved. Georgia has even strongly encouraged South African farmers to move to the country. She offered them farmland and Georgian citizenship in exchange for their know-how and investment.
The tourism sector has expanded rapidly over the past decade. Georgia was preparing to welcome 9 to 10 million tourists in 2020 for a population of 3.7 million. This represents a strong export sector.
By way of comparison, France receives 85 million tourists for 67 million inhabitants, or 1.27 tourists per inhabitant. Georgia receives 9M for 3.7M inhabitants, i.e. 2.43 inhabitants per capita. This shows the importance of this sector in terms of jobs, income, impact on the balance of trade and GDP.
After the Rose Revolution in 2004, Georgia was the most reform-minded country in the world. Since then, it has continued to turn the corner and implement real structural economic and governance reforms. It is ranked 7th in the world for the ease of doing business on the World Bank’s “doing business” website (while France is 32nd)? As a result, it has attracted a large number of foreign investors and obtained bi-lateral free trade agreements with China and Europe, helping to improve its economic performance.
The main reforms concern
- Infrastructure improvements (freeways and improvements to the port of Poti) to improve trade, connectivity with neighboring countries, tourist facilities, etc.
- Improving the quality of training to meet market needs. The economic meltdown of the 90s destabilized the entire training system. The people who wanted to go on to higher education were mainly doctors and lawyers, who have now become too numerous or even unemployed. This has led to labor shortages in many other sectors.
Georgia is a small market with a population of 3.7 million, so companies can only expect limited growth and/or turn to exports to grow, as the market is quickly swamped by large, even international, companies.
Relations with Russia
After the 1993 war, Russia supported the independence of the two territories of Abkhazia and Ossetia. For Georgians, these territories belong to them. A lot of tensions can arise in the heat of the moment, as in June 2019, when a member of parliament was due to speak in the Georgian parliament. Many Georgians demonstrated their discontent in front of the aforementioned parliament. This prompted the Russian government to take sanctions against Georgia, banning flights between the two countries. This decision deprived Georgia of a major windfall from Russian tourists. As a result, tourism revenues fell by 10% that year.