Counting Georgia’s losses due to the pandemic
The coronavirus epidemic has caused irreparable damage to global trade and Georgia is no exception.
Due to a downturn in foreign trade, total trade turnover was down 1.25 billion USD in the first half of 2020, with a $286 million reduction in exports and a $839 million reduction in imports.
Georgia has a small open economy and a small population. As a result, export volumes are of particular importance.
Reducing exports leads to a decrease in household income: with the decline in trade and tourism, household incomes dropped by about 13 percent.
In the first half of 2020, due to the pandemic, exports from Georgia decreased by 16 percent compared to last year.
Exports to Romania fell the most – by about $94 million. Georgia was shipping copper ore and copper concentrates to Romania, which it itself bought in Armenia and other countries, and then re-exported.
In second place is Russia (-$73 million, or -28 percent). Ferroalloys (a reduction of $28 million), mineral and drinking waters ($ 11million), and wines ($5 million) were exported to Russia.
Exports to Armenia decreased by $70 million (45 percent), which was mainly caused by the suspension of the re-export of cars.
The only country where the volume of exports was increased in the first half of 2020 was China.
Compared to last year, trade with China increased by $153 million and amounted to $205 million, which is four times more than in the first half of 2019. The growth was driven by increased supplies of copper ore and copper concentrate.
TOP-5 of Georgian exports in January-June 2020
● China – 205 million $
● Azerbaijan – 200 million $
● Russia – 188 million $
● Bulgaria – 163 million $
● Turkey – 102 million $
Main items of export reduction
29 percent of Georgian exports are re-exports, which in the first half of 2020 amounted to approximately $425 million.
The pandemic has hit re-exports more than exports themselves. In January-June of this year, the volume of Georgian re-exports fell by 40 percent, while pure exports fell by only three percent ($ 33 million).
The largest drop was recorded in the re-export of passenger cars – $99 million (35 percent). The second place was taken by the export of ferroalloys – $62 million (34 percent). Re-export of medicinal products is in third place – $60 million.
The sector of production of mineral and drinking water – $ 16 million, mineral and nitrogen fertilizers – $ 10 million, winemaking – $ 6 million suffered a sensitive blow due to the reduction in exports.
At the same time, in the first half of 2020, the export of precious metal ore and concentrates (an increase of $65 million), copper ore and concentrates ($ 27 million), gold ($12 million) increased. All this is mainly due to exports to China.
TOP-5 of Georgia’s export products in January-June 2020
● Copper ores – 332 million $
● Mottor cars – 184 million $
● Ferro-alloys – 118 million $
● Wine – 91 million $
● Precious metal ores – 65 million $
Reduced imports of Georgia
In January-June 2020, imports decreased by 19 percent.
The strongest was from Turkey – $131 million (18 percent), from the USA – imports decreased by $ 126 million (39 percent), from China – by $105 million (24 percent), from the EU – $ 252 million (23 percent), from Russia – by $ 21 million (five percent).
The only country from which imports have increased is Armenia ($72 million more than in the first half of 2019). The growth was driven by an increase in imports of ores and concentrates.
The largest losses were incurred by imports of cars (43 percent less than in the first half of 2019) and gasoline (32 percent). Only the import of precious metals has been increased (by $36 million) for subsequent re-export.