Georgia will try to reduce dependence on Russian wheat

In the context of complex processes around Ukraine, Georgia is not yet experiencing problems in terms of food supplies, but at the same time, the government plans to increase the country's wheat self-sufficiency rate from 15% to 50%, Georgian Minister of Environment and Agriculture said in parliament.

“In terms of food supply, at this stage, we have no delays. If necessary, we are ready to help businesses with alternative markets. However, the current situation has shown us that it is necessary to do even more in the direction of self-sufficiency in primary consumption products. That is why we are actively working, first of all, on developing the necessary measures to promote the growth of grain production, and very soon, with the involvement of industry representatives and scientists, we will present a program that will stimulate a significant increase in grain production in the country,” the minister said.

He also noted the positive dynamics as a result of the government's policy in the agricultural sector in the direction of production and export. “In 2021, the positive growth trend in the export of agri-food products that existed in recent years continued, and the export volume amounted to $1,142,000,000, which is unprecedented in the history of independent Georgia. This is approximately $200 million more (up 21%) over the previous year. The growth trend in exports of agri-food products continues in 2022, according to the first quarter, we have an increase of 5%,” minister concluded.

Italy overtakes Russia in terms of money transfers to Georgia

The total volume of money transfers to Georgia in March 2022 amounted to $193.1 million, which is 2.6% or $4.9 million more than in the same period last year, the National Bank of the country reports.

“Most of the money was transferred from Italy - $36.05 million. The Russian Federation is in second place with $27.00 million. The United States is in third place with $25.64 million, followed by Greece - $18.95 million and fifth place - Israel - $16.97 million.

According to the Central Bank, 93.8% of remittances to Georgia come from the 20 largest partner countries, in March these remittances exceeded $1 million. The same 20 countries accounted for 90.7% of all remittances in March 2021. At the same time, according to the National Bank, in March 2022, $24.0 million (77.8 million lari) was sent from Georgia abroad, which is 3.6% less than in March 2021.

Georgia's foreign trade increased by 38% from January to March

According to fresh statistics provided by the National Statistics Office (Geostat), Georgia's international trade turnover in the first three months of 2022 was USD 3.87 billion, up 38% over the same time last year.

Exports climbed by 43.3% to USD 1.17 billion year over year, while imports increased by 35.8% to USD 2.7 billion. In January-March 2022, the trade deficit was USD 1.52 billion, accounting for 39.4% of total trade turnover.

Georgia's exports were valued USD 411.4 million in March 2022, while imports were worth USD 895.7 million, for a total turnover of USD 1.3 billion. Exports climbed by 26% year over year, imports by 16%, and turnover by 19% compared to March 2021, a very small growth from February 2022 to March 2021. Georgia's exports were USD 429 million in February 2022, imports were USD 998.6 million, and turnover was USD 1.43 billion. They had increased by 60%, 54%, and 56%, respectively.

Georgia's two main commercial partners are Ukraine and Russia. Ukraine was Georgia's fifth-largest export destination in 2021, while Russia was the country's second-largest partner in terms of total turnover, exports, and imports.

The IMF and Georgia have reached an agreement at the staff level on a three-year $289 stand-by arrangement

The International Monetary Fund (IMF) and Georgia have achieved a staff-level agreement on a three-year Stand-by Arrangement (SBA) worth $289 million, which is subject to approval by the IMF's Executive Board, which will evaluate Georgia's request in May.

Prior to Russia's invasion of Ukraine, Georgia's economy had made a successful recovery from the COVID-19 pandemic, with growth reaching 10.4% in 2021. "War-related spill overs are predicted to reduce Georgia's growth to roughly 3% in 2022, boost inflation, and deepen the current account deficit." The prognosis is clouded by a higher-than-usual level of uncertainty, according to the IMF. "Georgia's economy has shown resilient in the past, and we anticipate growth to pick up in 2023 with the backing of measures under the authorities' agenda, as well as other important indicators to improve," the IMF emphasized. 

The authorities' policy, according to the IMF, was designed to preserve and reinforce macroeconomic stability in the face of back-to-back shocks from the epidemic and the conflict in Ukraine, promote medium-term development, and improve economic resilience. “After substantial pandemic support, fiscal policies are geared toward reducing the deficit to comply with the fiscal rule by 2023, restoring fiscal buffers, and creating space for priorities such as infrastructure and education. Should spill overs from the war such as elevated global commodity prices prove more severe than expected, targeted measures to help the vulnerable could be considered within the budget envelope,” the IMF said.

The programme will also seek to improve public financial management and limit fiscal risks, especially through the finalisation and implementation of a strategy to enhance the governance of state-owned enterprises.

The IMF said that several global shocks had contributed to inflation that is well above target in Georgia. “The country’s central bank continues to be appropriately focused on bringing inflation to target and we expect significant progress this year and next as global factors that are contributing to the surge in prices subside”. “The inflation targeting framework combined with the flexible exchange rate regime has served Georgia well. The authorities are committed to exchange rate flexibility, which acts as a shock absorber, and interventions will be limited to smoothing excessive volatility and preventing disorderly market conditions,” the organisation said. “Georgia’s financial sector has shown considerable resilience to the pandemic and the war in Ukraine, reflecting a robust supervisory and regulatory framework including the introduction and recalibration of macroprudential measures,” the IMF added.

Annual inflation in Georgia was 11.8% in March

The inflation rate in Georgia in March 2022 amounted to 2.5% compared to the previous month, while in the annual period for the noted period was 11.8%, according to the data of the National Statistics Service of Georgia.

In March 2022, prices for sugar and other sweets, most fruits, coffee, tea and cocoa, vegetable oil, bread and bakery products, dairy products, meat, mineral water, and soft drinks increased in Georgia. At the same time, prices for vegetables and melons decreased.

“Food and non-alcoholic beverages have risen in price by 17.8% over the year. In particular, prices for vegetables and gourds increased by 27%, soft drinks - by 24%, bread and bakery products - by 23.5%, sugar and other sweets - by 20%, fish rose by 19%, butter and other fats - by 17.1%, fruits by 16.8%, milk, cheese and eggs - by 15.3%, coffee, tea and cocoa - by 14.1%, meat and meat products - by 10.5%,” noted the study.

In addition, transport prices rose by 8.9%, which was reflected in the growth of the overall index by 1.03 percentage points. Increased prices for the operation of personal vehicles (11.9%), transportation services (3.3%) and the purchase of vehicles (1.3%), food and non-alcoholic beverages - prices in the group increased by 2.0%, which was reflected in on the growth of monthly inflation of 0.68%.

Trade turnover of Georgia with Turkey has increased

Georgia's commercial turnover with Turkey was $168.7 million in January 2022, up 47.5% from $114.3 million in the same month of 2021, according to Trend through the National Statistics Office (Geostat). In January 2022, Turkey's share of Georgia's total international trade turnover was 15.2%, compared to 15% in January 2021.

Over the reporting period of 2022, Turkey remained Georgia's leading trade turnover partner, followed by Russia ($128.6 million) and Azerbaijan ($121.9 million). Meanwhile, Georgia's exports to Turkey climbed by 28.8% to $27.5 million in January 2022, accounting for 8.3% of overall exports, compared to $21.4 million in January 2021.

Turkey ranks sixth in terms of exports among Georgia's top trading partners. Bulgaria ($49.6 million), Azerbaijan ($46.7 million), and Russia ($42.6 million) ranked first, second, and third, respectively. Georgian imports from Turkey climbed by 51.1% to $141.1 million in January 2022, accounting for 18.1% of overall imports, compared to $93.3 million in January 2021.