During the Soviet era, the Georgian industry was heavily dependent on imports of semi-finished goods and fuel from other Soviet republics, and its products were sold mainly within the Soviet Union.
In Georgia, for example, workshop machinery, agricultural implements, manure, synthetic fibers and pharmaceuticals were manufactured. The light industry was dominated by textile and food production.
The collapse of the Soviet trade after 1991 and the subsequent civil conflicts in Georgia led to a 70 per cent fall in industrial production between 1991 and 1995. Georgian industrial goods had difficulty competing in a free market. Even in the early 2000s, half of the industrial companies were estimated to be out of service. A privatization campaign in 2005-2007 revitalized the industrial sector and its share of GDP began to increase. In 2017, it was estimated to be up to just over 22 percent with the construction industry included. However, it is not the manufacturing industry, dominated by chemicals and food processing, that is the most important industry branch. The largest contribution to GDP comes from mining.
The construction industry experienced a strong upswing in the early 2000s thanks to the construction of oil and gas pipelines from the Caspian Sea to the Black Sea and the Mediterranean. Large and spectacular construction projects initiated by President Saakashvili, as well as extensive renovations of worn-out neighborhoods and major road construction, have also kept pace with the construction and civil engineering industry.
- COUNTRYAAH: List of top trading partners of Georgia. Includes countries that imported most shipments from and exported most goods to the country.
Georgia’s imports are growing faster than exports, resulting in a growing deficit in both the trade balance and the current account (total trade in goods and services).
Russia was previously Georgia’s most important trading partner in all respects. From there, Georgia bought oil and natural gas, and a large part of the exports went there as well. Following the embargo on Georgian goods introduced by Russia in 2006 (see Foreign Policy and Defense) exports to the Russian market shrunk dramatically, and Russia’s share of Georgia’s imports fell, especially after largely releasing its dependence on Russian oil and gas. But the government that took office in 2012 promised to try to increase trade with Russia, and the exchange has grown again in recent years. However, trade with the EU has grown more. Exports to EU countries were more than double that of exports to Russia in mid-2018, according to the Geostat statistics authority. Around 21 percent of Georgia’s exports then went to the EU and 10 percent to Russia.
Equally, Russia is important as an individual trading partner. The country is the main recipient of Georgian exports, followed by Turkey, China and Azerbaijan. By far, the largest for imports is Turkey, followed by Russia, China and Azerbaijan.
In November 2011, Georgia became the last country to give up its opposition to Russian membership in the World Trade Organization (WTO). This has happened since Russia agreed, after Swiss mediation, that a standalone company is allowed to carry out customs control of trade between Russia and the Georgian breakaway republics of South Ossetia and Abkhazia.
Imports are dominated by oil, natural gas, vehicles and machinery as well as food. The most important export goods are iron and other metals, fertilizers, vehicles, wine, fruits, nuts.
In recent years, Georgia has emerged as one of the countries that can receive future income through expanded transport routes for goods between China and Europe. Most transit traffic plans of this kind are linked to China’s “new silk roads”. When transporting via Central Asia and the Caspian Sea, Russian territory can be avoided. Because valuable or sensitive goods, such as electronics, can damage transport at sea, the economic reasons behind transit traffic are strong. A railway investment between Georgia and Azerbaijan (partly newly built, partly modernized older runway) has largely been funded by the State Azerbaijani Oil Fund.
FACTS – FOREIGN TRADE
US $ 4,407 million (2018)
US $ 8,518 million (2018)
– US $ 1,246 million (2018)
Commodity trade’s share of GDP
77 percent (2018)
Main export goods
metals, wine and fruits
Largest trading partner
Russia, Turkey, Azerbaijan
Georgia has beautiful scenery with interesting historical monuments and a pleasant climate. The Black Sea coast, the capital Tbilisi and the ski resort Gudauri are the main tourist destinations. A tourist industry has also emerged around the wine district of eastern Georgia.
In Soviet times, the beaches of Georgia were one of the most popular tourist areas of the Soviet Union, and Georgia made a lot of money on tourism. The influx of tourists ceased almost as a result of the civil war in the early 1990s. Only a few years into the 2000s, the tourism industry had recovered and it has grown strongly in recent years. Most tourists come from other former Soviet republics, but as the country has calmed down and the hotel and restaurant standards have been raised, Western Europeans have also begun to see Georgia as a trendy destination.
The development was interrupted by war in 2008, when Russia supported outbreak republics in Georgia (see Modern History). The conflicts have not been resolved, but tourists from Russia have subsequently increased several years in a row. In 2018, 1.7 million Russians visited Georgia. The number increased by only 22 percent between 2017 and 2018, according to an association for Russian tour operators. Russian hostile demonstrations in Tbilisi in 2019, however, caused Russian President Putin to suspend flights to and from Georgia; as the economic importance of tourism has increased, the consequences of such political decisions may become noticeable.
Citizens of EU countries do not need a visa and border formalities are insignificant.
FACTS – TOURISM
Number of foreign visitors per year
6 361 000 (2016)
US $ 2370,000,000 (2016)
The share of tourist income from exports
38.0 percent (2016)
EU: Provocated Georgia started the war
The EU’s delayed review report on the war between Georgia and Russia in 2008 states that it was Georgia who started the war by attacking South Ossetia. However, it is happening after a long period of provocation from Russia, according to the report, which also criticizes the Russian invasion of Georgia. All parties are accused of abuse, and South Ossetia and Abkhazia’s exit from Georgia is condemned. The report is a hardship for Saakashvili, but it cannot be exploited by the divided and powerless opposition.
Sharp conflict with Abkhazia
Tensions between Georgia and the breakaway republics are increasing as Georgia stops a Turkish ship transporting fuel to Abkhazia. In response, Abkhazian leaders later threaten to destroy Georgian vessels if they enter Abkhazian waters. However, he emphasizes that no Russian naval forces should be deployed.
Russian veto halted UN observation
UN observers leave Georgia after 16 years of monitoring the ceasefire between Georgia and Abkhazia. The UN cannot extend the mission because Russia vetoes it.
Mediated negotiations with Russia
Following mediation from the EU, the UN and the European Security and Cooperation Organization OSCE, Georgia and Russia will start negotiations after the war in May the year before.
Data on coup attempts are met with doubt
The Georgian leadership claims to have unveiled a Russian-inspired military coup attempt, in which Saakashvili and the interior minister would be murdered. From Moscow, the data is rejected as madness, but even within the Georgian opposition, many are doubtful. It is speculated that the information is in order to end the demonstrations against the government.
60,000 demonstrates against Saakashvili
About 60,000 people are demonstrating outside Parliament in Tbilisi, accusing President Saakashvili of imperial power and demanding his resignation. Extensive protests continue for a long time.
The Prime Minister resigns after three months
Fresh Prime Minister Grigol Mgaloblisjvili resigns and cites health reasons. However, the media reports on serious contradictions between him and Saakashvili. Former Prime Minister Nika Gilauri has been appointed as new Prime Minister.