Since regaining its independence in the early 1990s, Georgia has become the regional champion in terms of reform, economic development and progress regarding democratic institutions. Striving to succeed on its path of Euro-Atlantic integration, Georgia is positioning itself as a hub for doing business in the region and is developing an advanced international business environment and relations.

Located at the crossroads of Europe and Asia, and being the shortest transportation route between the two regions, Georgia is uniquely positioned to capitalize on increasing trade flows between Europe, the Caspian region, Central Asia and East Asia. It has one of the lowest and most manageable tax regimes in the world, an improving and more stable political and business climate, relatively low operating costs and an increasingly supportive government. These factors have made Georgia an attractive investment destination.

After signing the deep and comprehensive fee trade agreement with the EU (enacted on September 1, 2014), Georgia embarked on its journey towards European integration.  

One of the most important milestone in the latest history was the signature of Association Agreement (AA) with the EU in 2014, which further ensures stability of political and investment climate of the country. Georgia’s political system boasts open democracy and demonstrated effective transition of governments with a consistent commitment to economic liberalization and Eoro-Atlantic integration.

Today stable economic development, liberal and free market oriented economic policies, multi-lingual, well-educated and competitively priced workforce, only six flat taxes, preferential trade regimes, advantageous geographic location, well developed and multimodal transport infrastructure represents a solid foundation for successful operations and overall growth in Georgia.

In 2017, Government of Georgia implemented new tax policy and according to the new model of taxation system, companies pay the Profit Tax only on distributed earnings and reinvested profit is exempt from the Corporate Profit Tax.

ECONOMY OF GEORGIA

For centuries, Georgia's location along the Silk Road, and other heavily traveled trading routes between Europe and Asia, has provided an undeniable economic advantage. Today, this strategic location continues to provide opportunity, giving Georgia ready access to foreign markets and a large number of international trading partners.

Gross domestic product

Georgia has a diversified GDP structure that is well-positioned for sustainable growth. Georgia's nominal GDP was worth 15.9 billion US dollars In 2020. 

Inflation 

Price stability is fundamental to Georgia's future and sustainable economic growth. In order to maintain price stability, and to minimize fluctuations in economic growth, the monetary policy of the National Bank of Georgia relies on a regime of inflation targeting. Inflation targets have been set at 3% for 2019-2021.

Key Economic Sectorial Overview

Industrial manufacturing and processing

Georgia provides significant investment opportunities in the manufacturing sector, which attracted remarkable foreign direct investment between 2010 and 2019.  New opportunities are expected to be taken by greenfield investments in export-oriented manufacturing sectors, for which access to the European market would be attractive. 

There are significant business opportunities processing primary agricultural goods into higher value-added products and supplying equipment and services (greenhouses, storage, deep-freeze facilities, packaging, etc.). Georgian agriculture offers foreign businesses the opportunity to invest in areas with unmet market demand, significant cost efficiencies and strong profit potential.

Tourism and retail sector

Tourism is another field that has witnessed significant growth in recent years and is considered to be an important driver of economic development and job creation, as well as a revenue generator. The industry offers wide diversification in terms of its sub-industries: summer sea resorts, year-round mountain resorts (including skiing), spa-wellness, gaming and more. In fact, from 2003 to 2018, the number of international visitors to Georgia has increased significantly from 300,000 to 8.7 million.

According to a hotel market report prepared by Colliers International, the highest average occupancy rates in Tbilisi are in international midrange brand hotels (75%) and in international upscale brand hotels (74%). In addition, the ADR (average daily rate) for international upscale hotels is 203 USD.

Energy sector

The energy sector is attractive from the perspective of both existing natural resources and developing infrastructure, as the country possesses huge hydro resources and offers untapped investment potential. In recent years, Georgia has become a net exporter of electricity and currently utilizes only 18% of its vast hydro resources. The Georgian power grid is connected to the grids of all of its neighboring countries, which are faced with either a structural power deficit or expensive power generation. 

Transport and logistics

Georgia is in a highly strategic location: It serves as a gateway to the Caucasus and Central Asia. Going through the country is the shortest route between the Black Sea and the Caspian Sea region. Construction of the new Baku-Tbilisi-Kars railway line is in the final stages and will further advance trading in the whole region. The government is investing heavily in the development of road infrastructure, mainly highways, as well as local roads. Therefore, Georgia strives and has the potential to be the best place for regional offices and to become part of various value chains.

Georgian Railway provides vital freight and passenger transportation services across Georgia and connections with bordering countries. With 1,342 km of railways, an efficient network of connections, plenty of rolling stock, and a capacity of 28 mln t/year, it is the most effective connection between Europe and Asia. Of course, system-wide modernization programs have been planned, some of which are already underway and/or completed. The Baku-Tbilisi-Kars mainline project was initiated by the governments of Georgia, Azerbaijan and Turkey, rehabilitating and reconstructing a 180km length of the Marabda-Kartsakhi railway. This has significant importance, providing a modernized link between Georgian, Azerbaijani and Turkish railways with a capacity of 5-15 mln tons of cargo per year.

There are two operational cargo ports along Georgia’s Black Sea coast, one in Batumi and the other in Poti. The Batumi seaport, originally catering to oil transportation, has achieved international significance as a vital center along the Eurasian transportation corridor. It has 11 berths and drafts of 9m to 12m with an annual capacity of 15 mln tons of oil products, 2 mln tons of dry cargo, 0.7 mln. Ferry cargo, 100 000 TEU, 180 000 passengers. The Poti seaport is on the crossroads of the Trans-Caucasian Corridor/TRACECA, a multinational project that connects the Romanian port of Constanta and the Bulgarian port of Varna with landlocked countries in the Caspian and Central Asian regions. The port maintains 15 berths with drafts of 8m to 11m with an annual capacity of 4 mln tons of dry cargo, 1 mln tons of oil products, 1.0 mln. Ferry cargo, 500 000 TEU.