Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Georgia is a small transitional market economy of 3.7 million people with a per capita GDP of $5,015.3 (2021). Georgia is located at the crossroads between Europe and Asia. Its strategic location makes it a natural logistics and transit hub along the “New Silk Road” linking Asia and Europe via the Caucasus.
The Georgian economy is steadily growing, but external shocks in the region, such as international sanctions related to the Russia-Ukraine conflict and the COVID-19 pandemic with ensuing shut-downs initially had a negative impact on Georgia’s economy and contributed to lower growth rate than projected. However, Georgia’s economy has already largely rebounded, growing by 10.4 percent in 2021.
In June 2014, Georgia signed an Association Agreement (AA) and Deep and Comprehensive Free Trade Area (DCFTA) with the European Union (EU). Through reduced tariffs and the removal of technical barriers to entry of exports to the EU, the DCFTA gives many Georgian products access to over 500 million people in the EU. Reciprocally, products from the EU now have easier access to the Georgian market. The government is in the process of approximating EU legal and regulatory standards to allow for future access of additional products.
Launched in 2009, the bilateral U.S.-Georgia Strategic Partnership Commission (SPC) holds government-to-government dialogues, including meetings of an Economic, Energy, and Trade Working Group that aims to coordinate Georgia’s economic development strategy and expand bilateral U.S.-Georgia economic cooperation. In addition to the SPC, in May 2012, the United States and Georgia launched a High-Level Trade and Investment Dialogue to encourage bilateral trade.
Georgia’s successful economic reforms are reflected in its rankings by reputable international organizations. Georgia ranks 26th in the 2022 Economic Freedom Index of the Heritage Foundation, and, according to Transparency International, Georgia has the lowest corruption rate in the region. In February 2022, Fitch International Credit Rating Agency affirmed Georgia’s Long-Term Foreign-Currency Issuer Default Rating (IDR) status with a BB rating and called the country’s financial developments “broadly stable”.
In 2021, Georgia’s main export markets were the EU (16.9 percent), China (14.5 percent), Russia (14.4 percent), Azerbaijan (12.5 percent), and Turkey (7.6 percent). Georgia’s main sources of imported goods were the EU (22.9 percent), Turkey (18.1 percent), Russia (10.1 percent), China (8.6 percent), the United States (6.3 percent), and Azerbaijan (5.9 percent). Georgia’s main imports are petroleum products and natural gas, automobiles, copper ore, medicines, tobacco products, and wheat. After years of declining domestic manufacturing, most consumer goods are imported.
The Georgian Government does not control the regions of Abkhazia and South Ossetia, which have been occupied by Russia since the 2008 Russia-Georgia war. The situation along the Administrative Boundary Lines (ABLs) between Tbilisi‐administered territory and the Russian-occupied territories remains tense with ongoing “borderization” efforts by Russian-led security actors and continued detentions by the de facto authorities of those allegedly “illegally” crossing the ABLs into the occupied territories.