Get custom research and other real estate services

General effects

1.

Updated: Apr 27, 2021

The reliance of the Georgian economy on tourism

The reliance of the Georgian economy on tourism has increased significantly in the last couple of years. In 2019, tourism made up 8.1% of the Gross Domestic Product of Georgia.

(Source: National Tourism Administration)

Domestic tourism has a small role in the sector overall, and takes up a mere 28.5% (percent of local tourists in the total number of tourists staying at hotel-type accommodations, 2019). With these numbers, Georgia appears in the lower right corner of the graph (close to Greece). It is expected that the crisis will have a significant effect on the hotel industry and the economy in general for countries in the same category, and the recovery period will be extensive.

Domestic tourism relative to Tourism as a percentage of the economy, 2019
Significant impact on the hotel industry and economy, prolonged recovery
Significant impact on the hotel industry and economy, gradual recovery
Significant impact on the hotel industry but less on the economy, slow recovery
Significant impact on the hotel industry but less on the economy, faster recovery
Source: Colliers

2.

Updated: Apr 27, 2021

International tourists in Georgia

Georgia mainly receives tourists from its neighboring countries. Leading countries by the number of tourists in Georgia are Russia, Turkey, Armenia, Azerbaijan, Ukraine, and the EU countries collectively. Georgian government has officially opened the air border to our neighboring countries (and not only, check the full list*) . One the one hand, this decision will be an exhale for the tourism sector. One the other hand, looking at the latest newly confirmed COVID-19 data in the leading countries by tourists, they seem to have higher cases compared to Georgia, which may threaten to the pandemic situation in Georgia. Apart from this, Georgia opted to lift air travel restrictions for fully vaccinated travelers. All visitors, who've received two doses of any COVID-19 vaccine are permitted to enter the nation without producing a negative PCR test.

International Tourists by Country, 2019.
Source: Geostat

3.

Updated: Apr 27, 2021

Incoming Travelers by Airports

According to the European Commission latest paper, By summer 2021, at least 80% of people over the age of 80, and 80% of health and social care professionals , a minimum of 70% of the entire adult population in every Member State should get vaccinated. UK projects around 80% of the adult will receive at least first dose of a COVID-19 vaccination till summer. All these promising data creates a window for Georgia to target activated tourism/air travel with EU and UK from summer. Looking at 2019 performance, Tbilisi and Kutaisi International Airports had around 420k incoming international travelers from EU & UK, out of which EU & UK amounted 78% of Kutaisi Airport’s travelers and 18% of Tbilisi airport’s travelers. Therefore, Our observation is that Kutaisi Airport, will have more potential to recover its flights, while its main segment travelers’ will most probably be vaccinated.

Georgian Civil Aviation Agency has published new flight schedule for summer 2021. Flights from Tbilisi International airport will be performed to 24 destinations, 4 from Kutaisi Int. Airports (fully by Wizz Air), 6 from Batumi Airport. It should be also mentioned that Infrastructure of Georgian airports is being expanded in 2021. Batumi international airport will have capacity to serve 1.2mln-1.5 mln passengers, whereas Kutaisi International airport is tripling its capacity up to 1,000 passengers per hour. These changes create supporting preconditions for recovering tourism without disruptions.

Incoming International Travellers, 2019
Other Countries
EU & UK Citizens

4.

Updated: Apr 27, 2021

EXPOSURE OF THE ECONOMIC SECTORS TO COVID-19

Georgia’s economic sectors have experienced exposure to the crisis on different scales. According to the latest data published by Geostat forecasted change of 2020 GDP y-o-y (at market prices) has been corrected to -6.2%. Comparing 2020 to 2019, top 3 sectors with highest decline (-16%) appeared to be (1) Accommodation & food services, and Arts entertainment (-891 mln) (2) Transportation & Storages (-487 mln) (3) Wholesale and retail (-278 mln). These figures at some point are logical as These are the sectors which were mostly exposed to curfews, mobility and other type of restrictions. Slight increase was experienced in Agricultural (+4%), Healthcare (+8%) and Educational Sectors (+3%)

Change in GDP Value (mln) 2020 vs 2019
Agriculture, forestry, fishing
Mining
Manufact.
Electricity
Water
Construction
Retail
Transportation
Accommodation and food service
Information and Technologies
Financial Serv
Real estate
Professional activities
Public Admin.
Education
Healthcare
Arts, entertainment
Other activities

5.

Updated: Apr 27, 2021

The crisis of pamdemic had a negative impact on FDI inflows too into Georgia, recording a 52.9% decrease in 2020 y-o-y. (Preliminary data, Geostat). The largest decrease in FDI is reflected again in Hotels and Restaurants sector by -284%, which is 342 mln less investment compared to 2019. Another larger affected sectors are Energy (which contributed by 22% in FDI in 2019) decreased by 97.8% and transport and communications (which contributed by 10% in FDI in 2019) by 52.3% y-o-y. We faced stable increase (by 47.1%) in financial sector and significant increase in real estate activities.


FDI in Georgia by Economic Sectors (2020 vs 2019)
Source: GEOSTAT

6.

Updated: Apr 27, 2021

INCREASE IN REMITTANCES

Georgia had a positive money inflows in 2020 y-o-y, increased by 9% . The hardest months were April and May 2020, which coincides the world pandemic peak period, however since June, money inflows had increasing trend, achieving USD 1.89 billion at the end of the year. For comparison, the effect of the 2008 recession saw remittances decrease in 2009 by 16% compared to the previous year.

Compared to 2019 performance of money inflows, there is some changes in money transfers by countries. Top 5 countries still remain Italy, Russia, Greece, USA, Israel, however money inflows have been decreased by 15% from Russia, whereas increased by 24% from Italy, by 14% from Greece and by 22% from USA y-o-y.

Money Inflows by months, 2019-2020 (Thsd, $)
2019
2020

Money Inflows difference by top 5 countries 2020 vs 2019, (thsn, USD)