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Economic Growth Pace Declines – June Records 4% Upturn in GDP

The month of June saw a slight slowdown in economic growth pace, compared to May. Namely, in May GDP grew by 7.5% and this is a record figure for Georgia over the past years. According to preliminary report by Geostat, national statistics service of Georgia, in June 2018 real GDP growth pace constituted 4%, compared to the same period of 2017.

Averaged real growth in the second quarter of 2018 made up 6%, while real growth in January-June 2018 totaled 5.7%.

According to early report by Geostat, in June 2018, compared to the same period of 2017, a significant growth was recorded in the sectors of transport, hotels and restaurants, finance and trade fields.

According to Minister of Finance Nikoloz Gagua, in June, compared to May, the economic growth declined because of development sector. Gagua noted at the briefing that a new, European and ecological standards are being established in the development sector. Ministry of Finance expects the dynamics to get improved in the development sector. As to positive factors affecting the growth, exports and tourism occupy the major ratio, Gagua said. As to the sectors, high growth was recorded in June in the fields of transport, finances, hotels and restaurants.

It is noteworthy that a number indicators improved in the first two quarters of 2018. For example, According to Geostat, in January-June, foreign trade turnover rose by 24.5% to 5.986 billion USD. In this period exports annual growth made up 28.8% and reached 1.59 billion USD, while imports increased by 23% to 4.39 billion USD.

Moreover, in June 727 385 international travelers visited Georgia, Giorgi Chogovadze, head of national tourism administration noted. Tbilisi and Adjara are leaders in number of tourists. The most part of tourists in June arrived from Russian Federation, according to the National Tourism Administration.

In June 2018, 727 385 international tourists arrived in Georgia, up 13.8% compared to the same period of 2017. International visitors paid 606 792 visits to the country, up 14.2%. Number of tourist visits made up 399 989, up 68 550 visitors compared to June 2017 (+20.7%). The most number of visits of international visitors was recorded from Russia (+27.5%), Azerbaijan (+10%), Armenia (-5.5%) and Turkey (+14.7%).

In 2018 the economic growth due to the months is as follows:

  • January – 4.4%
  • February – 5.5%
  • March  – 5.6%
  • April – 6.5%
  • May – 7.5%
  • June – 4%
  • Averaged – 5.7%

As noted above, 28% upturn in exports has made positive affect on economic growth, as well as 10% growth in turnover of VAT payer companies. However, compared to May, turnover of VAT payer companies has declined.

Negative impact on GDP growth was made by deceleration of construction paces. Ministry of Finance expects that dynamics in development sector will be improved in several months.

By Merab Janiashvili
Economic Analyst
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