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GEORGIA
Economy

Cities in GEORGIA

Tbilisi

Economy

General

Georgia's economy was once one of the strongest in the former Soviet Union. The standard of living of the population was also the highest in the Soviet Union. Since the collapse of the Soviet Union, Georgia has suffered a major economic decline. One reason for this is that traditional trade relations with other former Soviet states have largely ceased.

A large part of the industrial raw materials and 80 to 85% of the energy supply came from these states. Much higher prices now have to be paid for these products, causing the trade deficit to widen considerably. Also the wars and conflicts between Georgia, Abkhazia and South Ossetia caused a further deterioration of the economy. Gross National Product (GNP) and industrial production fell dramatically (to only 10% of actual capacity), and inflation rose dramatically to 1500% in 1992! The external debt amounted to USD 1.8 million in 1999.

Growth sectors are trade and communications, although this does little to alleviate the enormous unemployment. Privatised agriculture also seems to be doing well, partly because of Georgia's very fertile soil. Georgia's function as a transit country for freight, oil and gas between Asia and Europe, among other things, seems to have the best chance of boosting the economy in the reasonably near future. Efforts are now being made, with financial help from abroad, to significantly improve the country's infrastructure.

Tourism could also become one of the pillars of the economy, but the conflicts in the autonomous republics, among others, have meant that Georgia is still shunned by tourists.

The autonomous region of Adjara is a favourable exception in these economically dark times, mainly due to its lively trade with the neighbouring countries of Turkeyand Armenia. It also manages to stay out of the conflicts with the autonomous republics. In the 21st century, Georgia's economic growth is better, reaching 5% (2017). The GDP per capita is $10,700 (2017) per year.

Agriculture and animal husbandry

Growth sectors are trade and communications, although this does little to alleviate the enormous unemployment. Privatised agriculture also seems to be doing well, partly because of Georgia's very fertile soil. Georgia's function as a transit country for freight, oil and gas between Asia and Europe, among other things, seems to have the best chance of boosting the economy in the reasonably near future. Efforts are now being made, with financial help from abroad, to significantly improve the country's infrastructure.

Tourism could also become one of the pillars of the economy, but the conflicts in the autonomous republics, among others, have meant that Georgia is still shunned by tourists.

The autonomous region of Adjara is a favourable exception in these economically dark times, mainly due to its lively trade with the neighbouring countries of Turkey and Armenia. It also manages to stay out of the conflicts with the autonomous republics. In the 21st century, Georgia's economic growth is better, reaching 5% (2017). The GDP per capita is $10,700 (2017) per year.

Mining, industry and energy supply

Georgia is blessed with many natural soil treasures. About 300 mineral ores have been found, half of which are being exploited. Mining primarily produces manganese in the region around Koetaisi, which is largely exported as ore and partly processed in Georgia (Zestafoni).

Rustavi, southeast of Tbilisi, is a large metallurgical complex with iron and steel plants and several chemical industries. Scattered across Georgia are factories producing things like agricultural machinery, tractors, building materials, foodstuffs or tea-picking machines.

Mountainous Georgia has many fast-flowing rivers from which a lot of hydroelectricity is generated in the summer. More than 200 hydroelectric plants have been built in the rivers, Rioni, Kura and Ingoeri. However, most of the energy has to be imported from abroad. For example, most natural gas is imported from Turkmenistan. Georgia also still imports most of its oil from Azerbaijan and Russia, although it has its own reserves of at least 24 million tonnes of crude oil.

The north-western mountains also contain around 360 million tonnes of coal. Under the Soviet Union, these resources were hardly used, as energy could be imported cheaply from other former Soviet republics. In order to be less dependent on expensive energy from abroad, everything is being done to exploit the country's own raw materials.

Trade and Traffic

Georgia trades mainly with the former Soviet republics. The main export products are fruit, vegetables, wheat, barley, wine, cognac, vodka, building materials, machinery and chemicals. The main export partners are Azerbaijan, Armenia , Ukraine , Russia , China and Turkey (2017).

The main import products are machinery, fuel and pharmaceuticals. The main import partners are Turkey, Ukraine, Azerbaijan, Russia and China.

Georgia has about 35,000 km of roads and 1600 km of railways. Three highways connect Georgia with Russia: from Tbilisi to Vladikavkaz, from Kutaisi to Vladikavkaz and from Sukhumi to Cherkessov. The main ports are Batumi (oil export and grain), Poti (capacity of 5-6 million tonnes per year and a container transhipment port) and Sukhumi. Tbilisi has an airport, but the Georgian aviation industry is still underdeveloped.

Infrastructure will have a decisive influence on the country's economic development. In particular, roads and ports can play an important role as a hub for transporting goods and services from the West via Turkey and the Black Sea to new markets in the Caucasus and Central Asia.


Sources

Bronnen

Burford, T. / Georgia
Bradt Publications

Georgia, Armenia & Azerbaijan
Lonely Planet

Rosen, R. / Georgia
Odyssey Publications

Spilling, M. / Georgia
Marshall Cavendish

CIA - World Factbook

BBC - Country Profiles

Last updated May 2024
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