Georgia’s trade deficit up 24% y/y in 2021

Georgia’s trade deficit up 24% y/y in 2021
By Iulian Ernst in Bucharest January 24, 2022

Georgia’s foreign trade deficit widened by 24% y/y to $5.83bn in 2021, reversing the 18% y/y contraction in 2020 and thus returning close to the pre-crisis trade gap ($5.72bn in 2019), according to data from the statistics office Geostat.

Foreign trade activity has gained momentum in Georgia along with the global trend in 2021, starting from the low base of 2020 – when the pandemic disturbed the global production and trade chains.

Exports increased by 27% y/y to $4.24bn, imports by 25% y/y to $10.07bn and the trade gap has widened by 24% y/y to $5.83bn – which accounts for nearly one third (32%) of the estimated GDP last year. The deficit-to-GDP ratio was roughly the same in 2019, before the crisis, then it narrowed in 2020 amid subdued private consumption prompted by an uncertain outlook.

Notably, out of the $4.24bn exports of Georgia, only $3.13bn (+30% y/y) are “domestic exports” while the rest consist of goods imported and re-exported. The category of motor cars is the most representative for the re-exported goods: $457mn in 2021.

The exports of ferroalloys nearly doubled (+94% y/y) to $477.5mn and they were entirely domestic exports.

The category of goods with the largest share in Georgia’s exports was that of copper ores and concentrates – $815.4mn (+4.7%), entirely domestic exports.

Wines are the third-largest export category for Georgia and in 2021 the country marked another record: $239mn total exports, out of which $238mn were domestic exports (+13.7% y/y).

The exports of nitrogenous fertilisers also increased at a high rate, by 65.4% y/y to $119.5mn in 2021, recovering from a temporary decline in 2020.

Compared to 2019, Georgia’s exports increased by 11.7%, and its imports by 5.8%, while the trade gap has widened by only 2.0%.

Notably,  domestic exports advanced by 34.5% compared to the last pre-crisis year, at a pace three times faster compared to the total exports.