Issue 43: Real GDP & FDI, 2014

The preliminary estimates of the real GDP growth rate in January 2015 is 0.5% and in February – 4.9%.

In 2014, the indicator of the real GDP growth rate was 4.8%, which exceeds (1.5 percent point) to the corresponding indicator in 2013 (3.3%).

In 2014, the volume of foreign direct investment increased significantly (35.1%) compared to 2013.

Source:National Statistics Office of Georgia

 Source: National Statistics Office of Georgia

In 2014, the largest share in GDP formation had trade (17.4%), manufacturing (17.1%), transport and communication (10.5%), state government (9.9%) and agricultural (9.2%) sectors. In this period, the structure of GDP is similar to the structure in 2013.

In 2014, the economy of Georgia grew by 4.8%. The indicator of real GDP growth rate exceeds (1.5% points) the corresponding indicator of 2013 (3.3%). In the first quarter of 2014, the real GDP growth rate was quite high (7.2%), while it slowed down during the next three quarters. In the fourth quarter of 2014, the economic growth was 1.8%.

In 2014, the volume of FDI increased by 35.1 % compared to 2013 and was 1272.5 mln. USD. The foreign direct investment increased significantly in the third (99.16%) and fourth (54%) quarters of 2014.

Source: National Statistics Office of Georgia

Source: National Statistics Office of Georgia

In 2014, the top five investors by country in Georgia are: Netherlands (26%), Azerbaijan (24%), China (15%), United Kingdom (9%) and Luxemburg (7%). This structure is different compared to the 2013: Netherlands (16%), Luxembourg (15%), China (10%), Azerbaijan (8.7%) and Emirates (7%).

In 2014, the top three economic sectors in terms of the largest FDI flow are: transport and communication (27 %), construction (23 %) and manufacturing (14 %), while in 2013, the FDI structure by economic sectors was the following: energy (26 %), financial services (18 %) and transport and communication (17 %).

It is interesting, that 74% of FDI comes to Tbilisi. The second most attractive region for foreign investors is Adjara (9%).

In 2014, the highest growth rate recorded in the construction sector (13.5%).

The construction sector was growing during the all four quarters, namely: in the first one – 12.6%, in the second – 17.9%, in the third – 17.8% and the fourth – 3.1%. The slowdown of the growth rate in the fourth quarter may be related to the seasonal factors, as well as currency devaluation.

In the corresponding period, the volume of foreign direct investment in the construction significantly increased (6 times) and reached to 295 mln. USD.

Due to the characteristics of the construction sector, the FDI flow in construction in 2014, will affect positively on the growth of this sector in the following period.

Source: National Statistics Office of Georgia

Source: National Statistics Office of Georgia

In 2014, the growth of manufacturing was only 2 %. This is due to the 5% decline of the manufacturing in the fourth quarter of 2014. It should be noted, that this sector was growing during the first (7%), second (4%) and third (5%) quarters.

In the mentioned period, the volume of FDI in manufacturing sector increased by 55% and reached to 222.5 mln. USD. In I (92%), II (89%) and III (2.7 times) quarters, the volume of foreign direct investment exceeds and in the IV quarter (-34%) is lower compared to the indicators of the corresponding quarters in 2013.

In 2014, the volume of trade increased (6.1%) compared to 2013. This is basically due to the growth of trade (12.8%) in the first quarter. The volume of trade continued to increase during the other three quarters of 2014, but the growth rate slowed down in the second (6.0%), third (5.5%) and the fourth (1.8%) quarters of 2014.

It is also interesting to analyze the FDI inflows in the trade sector, however, this indicator is not recorded separately by the national statistics office of Georgia.

 Source: National Statistics Office of Georgia