Mar 12, 2019

FDI inflows down by 34.9% YoY in 2018

Quick Update

  • According to the initial estimates of Geostat, FDI inflows declined by 34.9% YoY to 1,232 mln USD in 2018. As a % of GDP FDI inflows stood at an estimated 7.9% – normalized level following the above trend inflows over 2014–17 mostly reflecting the construction of the BP’s SCPX project finalized in 2018.
  • In addition to the finalization of the large-scale pipeline construction project, FDI inflows were negatively influenced by change of ownership of non-resident companies to residents with an estimated impact of 180 mln USD on total FDI inflows in 2018. Sizeable FDI related debt repayments also played significant role in the reduction of FDI inflows. It is worth mentioning that despite the 34.9% YoY decline in FDI levels, gross fixed capital formation went up by around 20% YoY in 9m 2018 in GEL terms (19.7% expressed in USD).
  • From the sectors perspective, transport and communication (-315 mln USD YoY), construction (-180 mln USD), real estate (-88 mln USD) and energy (-67 mln USD) sectors posted largest declines. FDI inflows went up in manufacturing (+44 mln USD) as well as more modest increase was registered in some other sectors.
  • As a result of FDI normalization and other factors CA deficit is likely to have continued to improve in Q4 2018 as well (see note on CA balance). Initial estimates on Q4 2018 BOP will be available on 29th of March.