Outlook and Indicators

www.pmcg-i.com
Newsletter, #5

Economic

EEEEEForeign Direct Investment

Foreign Direct Investment (FDI) has positive impact on countrys economy. It contributes to the improvement of living standards through increased productivity and production. Since 2012, quarterly dynamics of FDI is decreasing. In 2012, the volume of FDI was significantly lower in comparison with the corresponding indicator in 2011 (-23%). In the first quarter of 2013, the volume of FDI increased (25%) in comparison with the corresponding indicator of the fourth quarter of 2012, but it was lower than the volume of FDI in the first quarter of 2012 (-16%). In the first quarter of 2013, the share of foreign direct investment in comparison with GDP of corresponding period was 6.5% , which is lower than the corresponding rate for the I quarter of 2012 (7.9%).
Quarterly dinamics of Foreign Direct Investment
350 300
mln.USD

MJuly,2013

8% 7% 6% 5% 4% 3% 2% 1% 0% 2011 I II III IV 2012 I II III IV 2013 I

Foreign Direct Investment as a percent of GDP (%)

400

9%

250 200 150 100 50 0

21th place (out of 179 countries) in the ranking of Heritage Foundations Economic Freedom Index, 2013

Georgia in International Ratings

Foreign Direct Investment

Foreign Direct Investment as a percent of GDP

9th place (out of 124) in the

Foreign Direct Investment and real GDP growth rate

Growth rate of FDIcompared to previious year (%)

80% 60% 40% 20% 0% -20% -40% -60%

9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2011 I II III IV 2012 I II III IV 2013 I

Growth rate of real GDP (%)

64th place (out of 144 countries) in the Global Competitiveness Index of World Economic Forum, 2012-2013
In the period of 2011-2013, the dynamics of growth rate of foreign direct investment follow the dynamics of GDP growth rate except in the first and second quarter of 2012, when GDP growth was positive (6.7%, 8.2%), while FDI growth slowed down (28.4 , -11.7%). It should be noted that since the second quarter of 2012 FDI growth is negative (-11, 7%). In the first quarter of 2013, the indicator of foreign direct investment is higher than the corresponding indicator of the fourth quarter of 2012 (31%), but remains lower than corresponding indicator of the first quarter of 2012 (-16%).

ranking of World Banks Doing Business survey, 2013

511h place ( out of 176 countries)in the ranking of Transparency Internationals Corruption Perception Index, 2013

BB-/Stable/B - Standart and Poors , 2012

931h place (out of 142 countries) in the Legathum Prosperity Index 2012

Growth rate of Foreign Direct Investment

Growth rate of real GDP

Foreign Exchange Rate

USD
In the period of 2011-2012, the foreign trade balance was negative. In 2011, quarterly dynamics of the volume of foreign trade balance was increasing, as well as the quarterly dynamics of the volume of foreign direct investment. In 2011, FDI was covering 23% of trade balance. In 2012, quarterly dynamics of the volume of foreign trade balance continued to increase, except for the fourth quarter, while the volume of FDI decreased. In 2012, the volume of FDI was covering only 16% of trade balance. In the first quarter of 2013, the volume of trade balance decreased in comparison with the fourth quarter of 2012 as well as in comparison with the first quarter of 2013. In the first quarter of 2013 the volume of FDI was covering 22% of trade balance.
Foreign Direct Investment and Net export
2013 I IV III II 2012 I IV III II 2011 I -1600 -1400 -1200 -1000 -800 -600 -400 -200 0 200 400 600

01.01.13 1.6562 2.1845

09.07.13 1.6553 2.1276

EUR

Contact Information

PMC Research Center Tamar Jugheli

E-mail: tjugheli@pmcg.ge E-mail: pmcresearchcenter@ pmcg.ge T: (+995) 2 921171 www.pmcg-i.com

mln.USD Foreign Direct Investment Net export

Outlook and Indicators

www.pmcg-i.com
NNewsletter, #5

Economic

EEForeign Direct Investment

Foreign Direct Investment by countries (I quarter.2013 )
Japan

MJuly, 2013

Foreign Direct Investment by countries (2012)

16% 41%
Germany The Netherlands

20% 29%

Azerbaijan The Netherlands The Unated Kingdom

10% 10% 8%

Turkey Azerbaijan The Unated Kingdom International organizations Other

5% 6% 8% 15%

17%

China Chech Republic Other

7%

8%

In 2012, five major investor countries in Georgia were Germany (16%), the Netherlands (10%), Turkey (10%), Azerbaijan (8%) and the UK (8%). In the first quarter of 2013 five major investor countries were: Japan (20%), Azerbaijan (17%), the Netherlands (15%), United Kingdom (8%) and China (6%). It should be noted that in the first quarter of 2013 the largest share of foreign direct investment inflowed from Japan (20%), while FDI from Japan during 2012 was only 1.6% of the total investment.

Foreign Direct Investments by Economic Sectors (I quarter. 2013)

Financial sector

Foreign Direct Investments by Economic Sectors (2012)

Manufacturing

19%

37%

29%

Energy sector mining Transports and communications Manufacturing Other sectors

22%

Energy sector Financial sector Transports and communications

4%

17%

20%
Consultancy

5% 5% 6%

18%

18%

Other sectors

In the first quarter of 2013, the largest shares of FDI were allocated in the following five economic sectors: the financial sector (29%), energy (10%), mining and quarrying (5%), transport and communication (5%) and manufacturing (5%). In 2012, foreign direct investment focused on the following sectors: industry (22%), energy (20%), financial sector (17%), transport and communications (17%) and counseling (4%).

Basic Economic Indicators

Nominal GDP in current prices (mln USD)
Per capita GDP (USD) GDP real growth, percent Consumer Price Index Foreign Direct Investment (USD) Unemployment Rate External Public Debt (mln USD) Poverty Level

2011
14 438 3 230.7 7.20% 8,5% 1 117 15.10% 4200.5

2012
15829.7* 3519.6* 6.1%* -0.9%* 865.2* 15% 4357.1

I12*
3388.3 753.4
6.70%

II12*
3918.3 871.2
8.20%

III12*
4156.1 924.1
7.50%

IV12*
4367.6

I 13*
3487.6

Contact Information

971.1
2.80% 181

777.8
2.40% 226.2

PMC Research Center

Tamar Jugheli

269.4
-

219.4
-

195.4
-

E-mail: pmcresearchcenter@pmcg.ge
E-mail: t.jugheli@pmcg.ge T: (+995) 2 921171 www.pmcg-i.com

9.20%

9.7%*

Source:

National Statistics Office of Georgia, Ministry of Finance of Georgia, National Bank of Georgia

*projected

-2-