Recent Economic Developments

Ministry of Economic Development of Georgia

May, 2010

Country Overview
Area 69 700 sq km

Population 2009
Life expectancy Official language Literacy

4,4 mln
74.23 years Georgian 100%

Capital
Currency (code) GDP 2009 GDP - real growth rate 2009

Tbilisi
Lari (GEL) US$ 10.7 billion -3.9%

GDP - Per Capita 2009

Inflation rate 2009 (average
annual)

US$ 2 450.1
1.7% 31.5%

External debt to GDP 2009

Ministry of Economic Development of Georgia

Economic Growth
GDP tendency 2009*
15

Nominal GDP and Real Growth

11,1 5,9 4 0 -5 -10 -15 Nominal GDP GDP real growth 2003 2004 2005 2006 2007 2008 2009 * -3,9 5,1 6,4 7,8 12,3 9,6 9,4 10,2 12,8 2,3 10 10,7 5 0 -5 -10 -15 % 15

GDP growth, IV-I (Q, 2009) 27%

GDP Per Capita 2 450 USD
US$ billion

10 5

GDP growth, IV (y-o-y) 0.4%

Nominal GDP, 2009

3500 3000 US$ mln. 2500 2000 1500 2 327,0 2 564,7 5,3 2 732,2 3 117,9 7,0 12,0 14 12 10 8 % 6

Fastest Growing Sectors

2009 * Mining and Quarrying Health care and social security 9.3% 7.6%

Components of Nominal GDP 2009 *

Other 15,4 Financial Intermedi ation 2,9 Real estate 4,1 Education 4,9 Constructi on 6,1 Health Care 6,5 Manufactu ring 8,4 Public Administra tion 15,8

Trade 14,4

1000 500
0

4 2
0

Electricity, gas and water supply Education

5.9% 3.2%

09'I

09'II

09'III

09'IV

nominal GDP

growth *

Transport

2.1%

Transport & Communic ations 11,9 Agricultur e 9,6 * Preliminary Data

Ministry of Economic Development of Georgia

Inflation
Inflation 2009

End of period Inflation 3.0% Average annual Inflation 1.7%

Inflation Trend 2004 - 2009

12 10 8 % 6 7,5 5,7 6,2 3,0 1,7 2004 2005 2006 Average Annual 2007 2008 End of Period 2009 9,2 11,0 10,0
12 10 8 9,4 8,7 7,8 6,9 4,4 2,1 6,1

Inflation Trend

8,2
8,8

9,2
5,5

6 4 2 0 -2 -4

5,4

5,6 4,6 3,3 2,5 0,4 -3,1

5,8

3,2 2,2

2,7 1,9

3,0 1,7

2,7 1,6 1,9

4
2 0

1,6

1,8

2,2

2,3 0,1

2,2

Avarage Annual

End of Period (annual)

Ministry of Economic Development of Georgia

Labour Market
Unemployment Rate, 4th quarter of 2009 Unemployment rate - 16.3% Employed population 1,7 mln, of which: hired 0,6 mln self-employed 1,1 mln

Average monthly nominal salaries (nms) of employees in non-business & business sectors 2008-2009
Non-business sector 9.6% growth (IVQ, 2009/2008) Business sector 5.8% growth (IVQ, 2009/2008)

Unemployment Rate
700 635 526 488 564

18 16 14 12 % 10 8 6 4 2 0
2003 2004 2005 2006 2007 2008 2009 IVQ. 11,5 13,8 12,6 13,6 13,3 16,5 16,3

600

564
556

579 590

551 512

568 553

570 625 567

500
400 300 200 100 0

542

2008_I 2008_II 2008_III 2008_IV 2009_I 2009_II 2009_III 2009_IV Salaries in non-business sector Salaries of employees in business sector

Ministry of Economic Development of Georgia

Poverty Level
Subsistence Level 2004-2009
Subsistence Minimum
140 120 100 GEL 80 60 40 20 0 2004 2005 2006 2007 2008 2009
84,3 95,8 106,5 127,9 128,8

Subsistence Level has increased by

52.7% Poverty Level 2004-2008*

118,6

Poverty Level has declined by 2.5

point point point

Poverty depth has declined by 1.1 Poverty Severity has declined by 0.8
%

Poverty Level
30 25 20 15 10 5 0 2004 2005 Level 2006 Depth 2007 Severity 2008 8,1 4,0 7,6 7,2 6,9 7,0 3,2 3,2 24,6 24,1 23,3 21,3 22,1

3,6

3,3

* towards 60 per cent of median consumption

Ministry of Economic Development of Georgia

Foreign Trade
Foreign Trade 2009

Total trade turnover 5 513 mln. USD (29.3% decline)

Export 1 135 mln. USD (24.1% decline) Import 4 378 mln. USD (30.6% decline) Trade deficit -3 243.4 mln. USD (32.5% decline)

Export, Import, Trade Deficit

8 6 4 US$ billion 2 0
0,5 17,0 23,4 25,3 35,3 39,2 37,6

10 Main Trade Partners 2009

30,2

40 30 20 US$ mln.

3,7 1,8
0,6
0,9

4,4
1,2 1,5 1,1

800 600 400

166

2,5
0,9

226

5,2

6,3

1200
1000

23

21

1,1

227 37

82

10 0

84

788

378

418

301

289

153

200 0

175 6

128

-2
-4 -6

-0,7

-1,2

-1,6 -2,7 -4,0 -4,8 2008 2009 deficit/GDP (%)

-10
-3,2 -20 -30

Import

Export

2003 Export

2004

2005

2006

2007

Import

Trade Deficit

Source: National Statistics Office of Georgia

Ministry of Economic Development of Georgia

14

117

23

Foreign Trade
Foreign Trade, Q IV-I 2009 Foreign Trade 2010 I Q/2009 I Q
Turnover 1 359 mln. USD - 15% growth Export 339 mln. USD- 55 % growth Import 1 020 mln. USD 6% growth Trade Deficit -681 mln. USD 9% decline

Turnover 1 577 mln. USD 33.2% growth

Export 313 mln. USD - 43.4% growth Import 1 263 mln. USD 30.9% growth Trade Deficit - 950 mln. USD 27,2% growth

Trade Balance, Quarters of 2009/2010

1500 1000
1020 1131 1263

US$ mln.

0
-950,0 -746 -724 -823

965

219

295

307

313

1020

500

340

-500 -1000 -1500 09'I

09'II Export Import

09'III

09'IV

10'I

Trade deficit

Ministry of Economic Development of Georgia

-681

Foreign Trade
Foreign Trade With Country Groups 2009

Foreign trade turnover with EU 28.1 percent of total turnover Turnover - 1 546.9 mln. USD (26% decline) Export 237.6 mln. USD (29.1% decline) Import 1 309.2 mln. USD (25.5% decline)

Foreign trade turnover with CIS 30.4 percent of total turnover Turnover - 1 677.1 mln. USD (34% decline) Export 417.0 mln. USD (23% decline) Import 1260.1 mln. USD (37% decline)

Foreign Trade With Country Groups 2009

3000 2543 2500 2314 2092

2000
US$ mln 1500 1000 500 0 2003 2004 2005 EU 1404 785 983 957

1792
1329

1807 1547

1677

522 595

2006 CIS

2007

2008

2009 Source: National Statistics Office of Georgia

Ministry of Economic Development of Georgia

Diversified Trade Structure

Export structure by country 2009
Other 23% Turkey 20%

Import structure by country 2009

Other 32% Turkey 18% Ukraine 9% Azerbaijan 9% Germany 7%

Russia 2%
Germany 2% Italy 2% Azerbaijan 15%

Romania 3% Italy 3% Bulgary 3% China USA 4% 5%

USA 3% Bulgary 7% Ukraine 8% Armenia 8%

Canada 10%

Russia 7%

Export structure by product 2009

ferro-alloys 11,5% other 39,1% gold 10,2% motor cars 6,9% other nuts 6,2% scrap metals 5,6% copper ores, concentr ates 5.5%

Import structure by product 2009

petroleum and pertoleum oils motor cars 12,7% 5,8% medicaments 4,0% pertoleum gases 3,5% cigarettes 1,3% transmission apparatus 1,2%

wheat 2,4% other 66,0%

mineral water 2,2% wines 2,8% beverages 4,8%

sugar 1,2% chocolate 1,0%

fertilizers 5,3%

data processing machines 1,0%

Source: National Statistics Office of Georgia

Ministry of Economic Development of Georgia

Foreign Direct Investments

Year 2009 *
2500 19,8

FDI inflows
25 20 15,3 US$ mln. 1500 1000 500 340 0 2003 2004 2005 FDI 2006 2007 2008 2009* FDI share in GDP (%) 8,5 9,7 7,0 499,1 449,8 0 1 190,4 % 7,1 759,1 10 5
22.4% 22.1% 13.9% 11.8% 9.7% 8.4% 4.0% 3.2% 2.7% 2.0 % 98.1 1.9 100%

FDI 759,1 mln. USD Share of FDI in GDP 7.1% Growth IV-I (Q) 96 %

2000 2 014,8

12,2
1 564,0

15

FDI inflows, Quarters of 2009

300 250 US$ mln. 200 150 100
129,8 16,9 151,8 223,6 254,0 13,6 47,3

FDI breakdown by origin

2009*

50 40 30 20 10 0 %

United Arab Emirates Egypt Netherlands Turkey Panama UK Int. Organizations Azerbaijan India Czech Republic Subtotal Other Total

50 0

09'I
* Preliminary Data

09'II FDI

09'III growth *

09'IV

Ministry of Economic Development of Georgia

Foreign Direct Investment

FDI by Sectors 2009 * (%)
banking system 6,0 construction 10,5 other 1,4 agriculture 1,2 industry 26,9

FDI by Sources 2009* (%)

banks 6,0 privatization 12,6

other services 16,4 transports and communicati ons 20,2 enterprises 81,4

real estate 17,4

In Q IV-I, 2009
FDI in construction 218% growth FDI in agriculture - 41% growth FDI in real estate 21% growth

* Preliminary Data

Ministry of Economic Development of Georgia

Fiscal and Monetary Performance

Tax Revenue Performance
6000 5000 GEL mln. 4000 3000 1 742,3 2 497,7 3 139,2 4 469,1 5 517,7 5 137,5 2000 1000 0 2004 2005 2006 Budget Revenue 2007 2008 2009 Share of Tax Revenue
82,3 74,2 69,1 67,9 67,4 82,9

Exchange rate evolution (period average)

90 75 60 45 30 15 0 % 5 4,5 4 3,5 3 2,5 2 1,5 1
GEL/US$ GEL/EUR

2,43

2,38

2,26

2,23

2,29

2,19

2,33

2,15

1,91

1,81

1,78

1,67

1,49

1,67

2003

2004

2005

2006

2007

2008

2009

Source: Ministry of Finance of Georgia *Decrease in budget revenue as percent of GDP is caused by tax cuts effective from 1 January 2009

Source: National Bank of Georgia

NBGs Gross FX Reserves

2 516,3 2 033,4 2 155,6 1 891,0 1 889,7 1 807,8 1 838,0 1 675,0 1 610,9 1 635,5 1 659,4 1 674,0 1 699,0 2500 GEL mln. 2000 1500 1000 500 0 1 735,7 1 872,0 2 030,6 2 328,0 3000

1 532,5

1 417,0

1 527,8

1 486,2

1 476,5

1 440,9

1 383,6

Ministry of Economic Development of Georgia

1 218,2

1 433,1

1 462,0

Current Account Balance

Current Account Balance
Imports of goods and services Exports of goods and services Income and current transfers 7 499,0 5 916,9 5 266,8 4 412,9 3 318,1 2 492,8 1 865,3 193,5 1 288,5 2003 1 646,9 2004 895,3 725,3 793,3

8000 7000 6000 US$ mln. 5000 4000 3000 2000 1000 0
2005 2006 2007

492,4
2 187,5

421,1 686,7 939,5 3 182,4 3 688,4 2008 3 199,2 2009

CAD

Total Private Capital Inflow (TPCI)

CAD as a % of GDP

3000
2 990,2 2000 US$ mln. 1000 0 351,0
-383,3

25
2 293,0 479,6
-353,6

15 1 699,0 5
-1 274,3

1 508,1 734,8
-709,5 -1 174,6 -2 009,2

-1000
-2000 -3000

-5 -15 -25

-9,6

-6,9 -11,1

-2 915,3

-15,3
-19,1
2006 2007

-11,9

-21,6
2008 2009

2003
Source: National Bank of Georgia

2004

2005

Ministry of Economic Development of Georgia

External Public Debt

Year 2009

External Public Debt - 3 381,5 mln. USD Share in GDP 31.5%

External Debt
4000

External Debt to GDP

50,4

3500
3000 US$ mln. 2500 2000 1500 1000 500 0 -500
2004 2005
External Debt -6,6 5,4

3 381,5

60 50

40 35 30 25 %

36,2 27,1 21,9 17,6 21,0 31,5

2 691,4 1 857,7 1 734,9 1 697,5 1 790,0

25,6

40 30 20 %

20 15 10 5 0

-2,2

10 0

2006

2007

2008

XII' 2009

-10

2004

2005

2006

2007

2008

2009

External Debt, % change

Source: Ministry of Finance of Georgia

Ministry of Economic Development of Georgia

Tourism
In 2009 number of visitors to Georgia amounted to 1 500 049 persons Increased by 16% compared to 2008 The largest share of visitors falls on CIS countries 64.3%
Arrivals of non-resident visitors
Total 1600
1400 1200 983 1 059 CIS 1 290 Europe without CIS

Country

2008

2009

% change

1 500

1290107
EUROPE

1500049 1447724

16 16

1243783

459272
784511
AMERICAS

496973
950751 19555 11016 3298 14572 1030

8
21 12 16 2 8 61

thsds. person

1000 800 600 400 200 0 2002 2003 2004 2005 296 313 368 561

17489
EAST ASIA/PACIFIC MIDDLE EAST SOUTH ASIA 2006 2007 2008 2009 AFRICA

9459 3245 13457 640

Source: Department of Tourism and Resorts

Ministry of Economic Development of Georgia

Privatization and Licenses

Privatization
2003-2008
3 494 privatized items Total amount - more than 2,27 bn. GEL

Licenses
2009
42 auction
Issued Licenses - 350 Total amount 37 999 890 GEL

2009
472 privatized items Total amount - more than 177 mln. GEL

Privatization 2003-2009
1000 800 600 419 400 200 24 0 2003 2004 2005 items 2006 2007 2008 2009 income, GEL mln.
267 761 776

565
441

595

644

654

551
472

177 73

Ministry of Economic Development of Georgia

Key Figures

Enterprises January- February 2010 y-o-y

Number of newly registered Enterprises 8 742 Turnover of Enterprises 3 789.6 mln. GEL - 13.5% growth

Transportation Figures January- February 2010 y-o-y

Cargo Transportation 6,4 mln. tones 8% growth Passengers 43,3 mln. 3% growth Handled Cargo 3.6 mln. tones - 26% growth

Remittances, IQ 2010 - 199,5 mln.USD - 22.% growth Total Assets of Commercial Banks (by1st of March) - 8,418 mln. GEL - 1.1% growth (y-o-y) Loans Granted by Banks (February, 2010) 403,6 mln. GEL - 10% growth (y-o-y)

Total Amount of Deposits (by 1st of March) 2,9 bln. GEL - 11.3% growth (y-o-y)
Number of Issued Mortgages February, 2010 6 200 - 66.2% growth y-o-y Number of Construction Permits (issued by Tbilisi City Hall) 235 145% growth y-o-y Secondary Real Estate Transactions (highest point for the last four years) 24 031 - 1.1% y-o-y growth

Ministry of Economic Development of Georgia

Georgia in International Ratings

First Reformer in 2005-2009 in ECA region
Doing Business
Singapore New Zealand Hong USA UK Georgia Estonia Germany Lithuania Latvia France Azebaijan Armenia Turkey Russia Ukraine

Ease of Doing Business (Doing Business 2010) 11-th place (up from 15-st in 2009) Improved positions in: Paying Taxes 48 steps up Dealing with Construction Permits 2 steps up Trading Across Borders 55 steps up Employing Workers 1 step up Enforcing Contracts 1 step up

1 2 3 4 5

11 (up from 112 in 2006) 24 25 26 29 31 38 43 73 120

142

Index of Economic Freedom

Hong Kong Singapore New Zealand Switzerland USA Estonia Georgia Lithuania Belgium Armenia Latvia Romania Turkey Poland Azerbaijan Russia Ukraine

Index of Economic Freedom 2010 (Heritage Foundation) 26-th place (up from 32-nd place in 2009) Mostly Free Improved scores in: Business Freedom 1.3 points up Trade Freedom 8.5 points up Fiscal Freedom 2.3 points up Freedom from Corruption 5.0 points up

1 2 4 6 8 16 26 29 30

(up from 99 in 2005)

38 50 63 67 71 96 143

161

Ministry of Economic Development of Georgia

Georgia in International Ratings

Corruption
Perception Index 2009 (Transparency International) 66-th place (up from 67-th in 2008) Improved positions because of:
Highly effective reforms in earning public confidence Highly effective steps in improving countrys international image Post-revolution fallen of petty corruption

Corruption Perception Index

New Zealand Germany USA Estonia Poland Latvia Turkey

1 14 19 27

Georgia
China India Argentina Armenia Azebaijan Russia Ukraine Kyrgyzstan

49 56 61 66

(up from 130 in 2005)

79 84 106 120 143 146 146 162

Ministry of Economic Development of Georgia

Georgia in International Ratings

Bertelsmann Transformation 2010 (Bertelsmann Foundation):

Status Index 52-th place (up from 61-th in 2006) Management Index 42-th place

Status Index
Estonia Poland Latvia Turkey Ukraine Georgia Moldova Armenia Russia Azebaijan 4 10 13 20 37 52

Fitch Ratings 2009

(up from 61 in 2006)

61 62 65 86

Long-term foreign and local currency Issuer Default Ratings (IDRs) 'B+.
Short-term foreign currency IDR - 'B Country Ceiling - 'BB- ( upgraded from 'B+)

Management Index
Estonia Latvia Poland Turkey Georgia Ukraine Moldova Armenia Azebaijan Russia
3 13 19 23 42

Standard and Poors Ratings 2010

Long-term foreign and local currency Sovereign credit ratings 'B+ (upgraded from B)

66 79
85 95 107

Ministry of Economic Development of Georgia

End of Presentation

Ministry of Economic Development of Georgia