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International rankings and indicators help us to understand and assess how countries are performing in different areas. In this bulletin, Ukraine’s positions in international rankings and the dynamics therein are reviewed based on recent data. Its positions will also be compared with other Eastern Partnership (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, and Moldova).
The number of international travelers increased by 288.8% in November 2021, compared to the same period of 2020, and declined by 73.0% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 267.2% (2021/2020) and declined by 69.3% (2021/2019), and the number of international tourists increased by 283.2% (2021/2020) and declined by 55.3% (2021/2019). Observing the total number of outbound tourism trips taken by Georgians in 2019 and the pandemic-dominated years since shows that from the beginning of 2021, the demand for international travel among Georgians has demonstrated significant recovery trends, the total number of outbound visits reaching 22.6% of pre-pandemic value in Q3 of 2021, due to vaccination rollout and the easing of entry restrictions in many countries. An evaluation of the common characteristics of Georgian outbound visits shows that the outbound tourism industry is fairly concentrated in terms of the purpose of visit (top 3 purposes amounting 82.4% of total outbound visits) and visited countries (top 4 destinations accounting for 82.9% of total visits), meaning that the alleviation of entry restrictions to such countries positively affects the number of Georgians taking trips abroad.
In Georgia, the average cost of a room in a 3-star hotel was 135 GEL per night in November 2021, while the average cost of a room in a 4-star hotel in Georgia was 226 GEL per night and the average cost of a room in a guesthouse was 101 GEL per night. The average cost of a room in a 5-star hotel in Georgia in November 2021 was 395 GEL per night. In Kakheti, the average price was 555 GEL, followed by Tbilisi - 544 GEL, Guria – 397 GEL and Adjara - 354 GEL.
According to a survey of Georgian economists, the economic climate in the country in the fourth quarter of 2021 has improved compared to the third quarter of the same year, as well as compared to the fourth quarter of 2020. Meanwhile, with respect to the current situation, the Georgian economists’ appraisal was again positive and has improved compared to both: the previous quarter this year and the corresponding quarter of the last year. The economists’ predictions for Georgia’s economic situation for the next six months were also positive. Indeed, their expectations for this period were much higher compared to their predictions in the third quarter of 2021 and the forecasts they made in the fourth quarter of 2020.
The global economic recovery is ongoing, however the COVID-19 pandemic is still causing considerable volatility. Since the beginning of 2021, inflation rates have increased in both advanced and emerging economies, generally driven by pandemic-related supply-demand mismatches and rapidly rising commodity prices, following a global decline in inflation over the course of 2020. According to the latest forecasts, for most countries upward price pressures are expected to subside with a return to pre-pandemic levels by mid-2022. With this in mind, it is pertinent to compare the inflationary trends of Georgia with global patterns. In Georgia, the year-over-year (YoY) Consumer Price Index (CPI), which measures the average price of goods and services acquired by consumers compared to the reference period, has proved relatively similar to global trends, as in December 2020 the inflation rate showed a significant decline of 4.6 percentage points compared to December 2019, reaching 2.4%, major decrease (25.4 pp) in prices coming from “housing, water, electricity, gas and other fuels” category, which can be explained by the introduction of utility subsidies for households from November 2020 and plummeting global oil prices in the middle of 2020.  This figure was still higher than the lowest figure of the reporting period which was recorded in December 2018 (1.5%). Since the beginning of 2021, monthly YoY CPI inflation has been increasing sharply, surpassing pre-pandemic levels, and reaching its peak to date of 12.8% in October 2021 with a 10 pp increase from the beginning of the year. On the contrary, YoY monthly core inflation increased in the middle of 2020, reaching 6.6% in June 2020 (with significant increases in prices of routine household maintenance, healthcare, and restaurants and hotels) and this has continued to be relatively stable with a monthly average value of 5.8% over the 2020-2021 period, while the pre-pandemic (2017-2019) monthly average was equal to 3.1%. The magnitude of the fluctuations was significantly lower in the case of core inflation compared to CPI inflation, which could be explained by the fact that the most significant price variations have tended to come under the food and energy categories.
The number of international travelers increased by 324.3% in October 2021, compared to the same period of 2020, and declined by 71.8% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 313.7% (2021/2020) and declined by 69.1% (2021/2019), and the number of international tourists increased by 331.5% (2021/2020) and declined by 57.0% (2021/2019). An observation of the total number of domestic tourism visits in Georgia in 2019 and then throughout the pandemic revealed that since the end of 2020 the numbers surpassed pre-pandemic levels significantly. The total expenses of domestic visitors in Q2 2021 reached GEL 610 million, which is 70.7% higher than in the corresponding period of 2019, and 128.1% higher compared to Q2 2020.
In Georgia, the average cost of a room in a 3-star hotel was 136 GEL per night in October 2021, while the average cost of a room in a 4-star hotel in Georgia was 246 GEL per night and the average cost of a room in a guesthouse was 99 GEL per night. The average cost of a room in a 5-star hotel in Georgia in October 2021 was 436 GEL per night. In Kakheti, the average price was 615 GEL, followed by Tbilisi - 588 GEL, Adjara – 416 GEL and Guria - 403 GEL.
For developing countries, attracting FDI has great potential to serve as a tool to achieve higher economic growth through reducing unemployment, increasing exports, boosting productivity, and improving capital inflows. During the last two decades, Georgia has adopted many reforms to eliminate obstacles in the way of doing business and to attract foreign investors. As a result, Georgia became one of the best performers in the world according to international indices on doing business and openness to investments, and recorded substantial growth in FDI, especially in the period of 2014-2017. However, those reforms have not been sufficient to ensure a prolonged steady inflow of FDI nor have they maximized the potential gains from foreign investment.
The number of international travelers increased by 362.5% in September 2021, compared to the same period of 2020, and declined by 73.1% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 348.8% (2021/2020) and declined by 71.1% (2021/2019), and the number of international tourists increased by 401.3% (2021/2020) and declined by 61.1% (2021/2019); The hotel industry of Georgia had been growing steadily before the pandemic struck, with a significant increase in the number of hotels and considerable growth in the number of people employed in the sector. In 2020, the previously positive trends in major industry indicators reversed which had a large economic impact, causing a 37.3% decrease in the number of hotels operating in Georgia; During the first year of the pandemic, the role of Georgian residents in tourism increased significantly as they made up 69.4% of total visitors, while the share of hotel visits for medical reasons peaked over the period of 2016-2020 largely due to the utilization of hotels as quarantine zones.
Poverty alleviation remains one of the biggest challenges for the world, including Georgia. Methods applied to determine the poverty rate vary from country to country, so in order to gain a broad understanding of the current situation regarding poverty in Georgia at the international level, it is important to take into account a variety of indicators. In 2020, GDP per capita in Georgia amounted to 4279 USD, ranking it 122nd in the world and 3rd among Eastern Partnership (EaP) countries. Meanwhile, the Human Capital Index (HCI) calculates the contributions of health and education to worker productivity with Georgia scoring 0.57 in 2020, ranking 85th out of 174 countries world and having the lowest score among EaP countries.Multidimensional poverty encompasses various forms of deprivation experienced by poor people such as poor health, lack of education, inadequate living standards, poor quality of work and the threat of violence. In 2019, 3.8% of the population in Georgia was multidimensionally poor, ranking 57th out of 120 countries in the world and first among EaP countries. The Gini Index measures income distribution within a society. In 2021, Georgia scored 36.4 on the Gini Index, ranking 76th out of 165 countries and having the highest inequality rate among EaP countries. In terms of life expectancy, in 2020 average life expectancy in Georgia was 74.2 years, ranking it 101st in the world and 3rd among EaP countries. Taking into account these indicators, Georgia, on an international level, is an upper-middle-income country with moderate rates of inequality and life expectancy. Due to its poor educational and healthcare systems, Georgia has been unable to mobilize its human capital to achieve a higher level of economic development.