Jun 11, 2019

FDI inflows at 7.3% of GDP

Quick Update

  • According to the initial estimates of Geostat, foreign direct investments picked up by 42.6% on a quarterly basis, however, inflows decreased by 6.3% YoY in the USD terms from 300 mln USD in Q1 2018 to 281 mln USD in Q1 2019 (in the EUR and the GEL, 1.9% and 0.9% YoY increase, respectively). As in 2018, the finalization of South Caucasus Pipeline Extension Project* and the change of ownership of nonresident companies to residents likely played a role in Q1 2019 as well.  
  • FDI inflows saw an increase in the gambling industry (around +133 mln USD YoY), the communication sector (+76 mln USD YoY) and agriculture (+4 mln USD YoY), while a decrease was observed in the financial industry (-68 mln USD YoY), construction (-61 mln USD YoY), transport (-38 mln USD YoY), manufacturing (-20 mln USD YoY), and real estate (-6 mln USD YoY).
  • In terms of regions and countries, FDI inflows increased from the EU (+9 mln USD YoY; +133 mln USD from Ireland), Turkey (+74 mln USD YoY), and decreased from the CIS (-48 mln USD YoY) – mostly due to the decline from Azerbaijan (-41 mln USD).
  • As of the last four quarters ending in Q1 2019, FDI inflows still stood at strong 7.3% of GDP. Furthermore, 2018 gross fixed capital formation was at a solid 33.3% of GDP (see charts on the next page).
  • Going forward, FDI inflows are expected to be also supported by new free trade agreements and large projects such as the Anaklia Deep Sea Port and Nenskra Hydropower Plant.
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