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Economy

Georgia is an industrial country. Agriculture forms 19% of the GDP, industry forms about 22%, services form 40 – 43%. There is a considerable GDP growth tendency (11.1% for 2003). The Government has planned the annual GDP growth rate 12% by 2007, although experts find the figure of 6.6% more realistic.

Georgia has a transition economy. In 2003 the GNP per capita was $830. The state ownership is considerable. Currently there are about 1800 enterprises with about 180 000 employees with the state equity participation. Officially declared unemployment rate is 8%; inflation rate has varied from 3 to 8% within the period of 2001 – 2003.

The influx of foreign investments is rather low; at the same time Georgia has a large external debt exceeding $1.8 billion (as to mid 2004; 46% of the GDP of 2003). Sum total lent solely by the IBRD/IDA during 1995 – 2004 is $773 million. Georgian Government exercises the economic policy accordingly to the standards of the international financial institutions.

Georgia has trade balance deficit with import exceeding export 36% as to the first six months of 2004. Transactions with Russia form 13.5% of the foreign trade turnover (as to January – August 2004), transactions with EU form 29.8% (export – 15.6%, import – 35.1%).

Amongst major trade partners of Georgia are Turkey ($188.2 million – 12.5%), Great Britain ($132.4 million – 8.8%), Turkmenistan ($113.7 million – 7.6%), Azerbaijan ($107.3 million – 7.1%), Germany ($97.2 million – 6.5%), Ukraine ($ 94.4 million – 6.3%), the United States ($84.6 million – 5.6%). The main imported goods are oil and oil products, natural gas, tobacco. Georgia exports scrap metal, manganese ore, mineral waters, iron and basic metals alloys, agricultural products.

Industrial Structure

Georgian economy is traditionally based on tourism, agriculture (citrus plants, tea, vine and wine making), manganese and copper mining, chemical and textile industries.

Since the independence was declared in 1991 Georgia has also developed as a transit region. Convenient geographical location, participating the Baku – Tbilisi – Ceyhan oil pipeline and South Caucasian gas pipeline projects are steadily turning Georgia into a Eurasian transit corridor.

The Baku – Tbilisi – Ceyhan oil pipeline project has become one of the key factors of Georgia’s economic growth. This project has a very positive impact upon the construction industry, transportation, communications and various services.

Baku– Tbilisi – Ceyhan oil pipeline (BTC)

Main Baku – Tbilisi – Ceyhan oil pipeline (BTC) is supposed to become the basic system to transport around 1 million barrels a day (50 million tons of oil annually) from Azerbaijan across Georgian territory to Ceyhan (Turkey) located on the Mediterranean coast. The pipeline is over 1760 km long with the length of its Georgian section of about 248 km. Construction works started in spring 2003, and it is planned to go into operation in 2005.

Construction works are being financed by a consortium of several companies, headed by British Petroleum.

South-Caucasian gas pipeline (SCP)

The South-Caucasian gas pipeline (Baku – Tbilisi – Erzerum) project is supposed to provide annual transportation of 30 billion cu m of natural gas from Azerbaijan to the Georgian-Turkish border via a system of pipelines. On the Turkish territory the gas will be carried to the local consumers via a local pipelines system. The total length is supposed to be over 690 km with its section from the Sangasel terminal to the Georgian-Turkish border near Akhaltsikhe running alongside the BTC pipeline. It’s planned to go into operation at the end of 2006.

Construction works are being financed by a consortium of several companies, headed by British Petroleum.

Main Economic Indicators

GDP
In 2004 Georgia’s GDP increased by 8.4% (against expected 6.6%) and was equal to $2.2 billion or 4.5 billion lari (as to the first six months of 2004).

GDP – per capita
According to the UNDP, in 2004 Georgia’s purchasing power parity of GDP was $2500 per capita. (Hence, Georgia’s GDP of 2004 was $12 billion.).

Inflation rate
According to unofficial data, the inflation rate was 10.5% in 2004; citing official data, it was 6%. For the year of 2005 the inflation rate is expected to be 5%.

Budget deficit
The New Georgian Government (since 2003) has solved the chronicle budget deficit problem. For the first time in many years the budget revenues have exceeded the expenditures by 9%.

Unemployment rate
Officially declared unemployment rate is 8%. According to unofficial data, it is varied from 13 to 17%. Some experts estimate the unemployment rate as 22-28%.

Labor force – by occupation
Public sector: 22.9%
Private sector: 77.1%
55% of employed population work in the agricultural sector, though most of employees in this sector belong to the self-occupied category and work in truck farming.

Development rate
According to the UNDP ratings on human resources development index, in 2002 Georgia took the 97th place in the world list.

Main Macroeconomic Indicators of Georgia as % of the previous year

 

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Gross domestic product

102,6

111,2

110,5

103,1

102,9

101,8

104,8

105,5

111,1

108,4

Industrial production

86

107

108

98

107

111

95

107

115

103

Agricultural production

113

106

107

90

108

85

106

99

111

94

Capital investments

151

106

152

180

49

97

111

118

191

1221)

Freight carried

103

94

139

122

107

116

111

113

110

100,1

Retail trade turnover

255

121

128

112

105

111

106

104

109

107

Industrial producers price index

...

...

...

102

116

106

104

106

102

105

Consumer price indices

263

139

107

104

119

104

105

106

105

106

Export to CIS countries

81

136

107

78

100,1

121

112

116

136

144

Export to other countries

147

123

145

83

154

148

89

102

133

135

Import from CIS countries

58

170

126

79

84

102

111

115

127

178

Import from other countries

363

175

145

102

61

127

104

101

154

154

1) January-September

Source: Interstate Statistical Committee of the CIS
Statistics

State Department for Statistics of Georgia - www.statistics.ge

Interstate Statistical Committee of the CIS - www.cisstat.com
Official statistical information on social and economic situation in the CIS countries



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