In this bulletin, a snapshot of remittance inflows into Ukraine pre-COVID is discussed, followed by its developments in 2020. According to the World Bank, global remittances will decline by 14% by the end of 20212, compared to the pre-pandemic level of 2019; In 2020, remittance inflows into Ukraine declined just by 0.3%, compared to 2019; Remittance inflows in Ukraine have been growing at an annual average of 8.2% over the past decade; The contribution of remittances to GDP in Ukraine amounted to 7.7% in 2020; The top senders of remittances to Ukraine in 2020 were Poland (26%), the United States (10%), and the United Kingdom (9%). In 2016-2019, the top senders were Poland (30%), Russia (12%), and the United States (8%); Remittances from Russia declined the most in 2020 (-20%), compared to 2019, while the United Kingdom recorded the strongest growth (69%) over the same period.

PMC Research has launched a new periodic publication entitled Sector Snapshots. Each issue focuses on a specific sector of the Georgian economy, observing developments with respect to key indicators of the given sector as a whole, the sector’s dynamics, its role in the overall economy, and, finally, financial indicators of companies within that sector.   The publication will produce valuable insights for businesses engaged in the covered sectors, as it lays out the trajectory of development for each sector and its possible financial bottlenecks, thereby contributing to more informed and efficient decision-making.  In the first issue of our new publication, we focus on Georgia’s microfinance sector.  In 2017-2019 new regulations on microfinance institutions (MFIs) entered into force, which significantly altered the landscape of the industry; Between Q1 2017 and Q4 2020, the number of MFIs and employees in the sector fell, with the former dropping to 40 and the latter to 4145 by Q4 2020 (52% and 16% decrease, respectively) In Q4 2020, MFIs in Georgia held 1.48 bln GEL of assets and 0.98 bln GEL of liabilities. In this period, the consolidated assets and liabilities of MFIs increased, compared to Q4 2019 with a growth of 7% and 9%, respectively. Compared to Q1 of 2017, figures increased by 6% and decreased by 1%, respectively; In 2020, gross income (revenue) of MFIs decreased, compared to 2019, and dropped by 10% to 332.6 mln GEL, while net income increased to 44.8 mln GEL. Moreover, the net income margin increased by 14 percentage points and reached 14%; By the end of 2020, portfolio of loans issued by MFIs amounted to 1.18 bln GEL, while number of loans in portfolio amounted to 0.66 mln loans, which represented 8% increase and 16% decrease, respectively, compared to the figures by the end of 2018.

The number of international travelers declined by 75.3% in March compared to the same period of 2020, and by 90.7% compared to the same period in 2019. Meanwhile, the number of international visitors fell by 73.4% (2021/2020) and by 89.0% (2021/2019), and the number of international tourists fell by 64.4% (2021/2020) and by 84.4% (2021/2019); Saudi Arabia, the United States, Qatar, United Arab Emirates (UAE), and the United Kingdom rank as the top five countries of origin when it comes to highest average expenditure per visit; Turkey, Saudi Arabia, Qatar, UAE, and Armenia rank as the top five countries of origin when it comes to average expenditure per day; Targeting visitors from Turkey, via both air and land routes, could be an effective marketing strategy, at least in the short term; Due to the abnormal impact of the pandemic on 2020 prices, we use 2019 as the comparison year for the Hotel Price Index for the rest of 2021.

In Georgia, the average cost of a room in a 3-star hotel was 124 GEL per night in March 2021, while the average cost of a room in a 4-star hotel in Georgia was 219 GEL per night and the average cost of a room in a guesthouse was 80 GEL per night. The average cost of a room in a 5-star hotel in Georgia in March 2021 was 332 GEL per night. In Guria, the average price was 587 GEL, followed by Tbilisi - 436 GEL, Adjara - 295 GEL and Kakheti – 293 GEL.

To address the challenges posed by the pandemic, various government measures have been taken at both national and local levels. In order to withstand the economic recession, almost all countries, including Ukraine, have introduced significant fiscal stimulus packages. Exclusively for the 2020 fiscal year, the Government of Ukraine created a stand-alone budgetary program under the Ministry of Finance to fight the pandemic, with an overall budget of UAH 80.9 billion (or 2% of Ukraine’s 2019 GDP).  

In Georgia, the average cost of a room in a 3-star hotel was 126 GEL per night in February 2021, while the average cost of a room in a 4-star hotel in Georgia was 180 GEL per night and the average cost of a room in a guesthouse was 75 GEL per night. The average cost of a room in a 5-star hotel in Georgia in January 2021 was 345 GEL per night. In Guria, the average price was 464 GEL, followed by Samtskhe-Javakheti - 433 GEL, Tbilisi - 428 GEL and Kakheti – 329 GEL.

The number of international travelers declined by 91% in February compared to the same period of both, 2020 and 2019, while the number of international visitors fell by 90% and the number of international tourists fell by 86%; From March 2020 to February 19, 2021, 220 different hotels, and 11 744 hotel rooms, were utilized under the quarantine zones program. A total of 148 904 people stayed in these quarantine hotels over the covered period, and 3 644 people maintained their jobs in these hotels due to the program; From March 2020 up to and including January 2021, a total of GEL 66.6 mln was spent under the program, averaging GEL 6.1 mln per month. On average, 94 hotels and 6340 hotel rooms were utilized per month, and 32 GEL was spent per hotel room per day.

In 2020, the COVID-19 pandemic heavily disrupted the world, causing both a global health emergency and a global economic crisis. While almost every country and every sector have been affected, economies reliant on the service sector, and especially the tourism industry, such as Georgia, have suffered notably. Indeed, measures taken to contain the spread of the virus have had an especially negative impact on the economy. Preliminary estimates suggest a decline in Georgia’s real GDP in 2020 of 6.1%, the sharpest drop since 1994.In this issue, we provide forecasts for the performance of the Georgian economy for 2021, namely regarding its real GDP growth rate, sector-specific growth rates, and employment.

According to a survey of Georgian economists, the economic climate in the country for the first quarter of 2021 has been and will continue to be worse than the last quarter of 2020. Their assessment of the current situation was also significantly worse than the corresponding quarter of the previous year. The economists’ predictions for Georgia’s economic situation for the next six months were also negative. Specifically, their expectations for this period remain similarly bleak to those stated in the final quarter of 2020, and were considerably more pessimistic than the forecasts they made at the same time last year.

The number of international travelers declined by 94.5% in January compared to the same period of 2020, while the number of international visitors fell by 93.6% and the number of international tourists fell by 91.9%; In January 2021, the year over year Hotel Price Index decreased by 33.8% in Adjara and by 28.5% in Samtskhe-Javakheti; The number of ski-lift users in Georgia grew significantly, by an annual average rate of 21%, from the 2014-2015 season up to and including the 2018-2019 season. However, compared to the 2018-19 season, the number of ski-lift users dropped by 20% during the 2019-2020 season, due to the looming COVID-19 pandemic which effectively brought the season to an early finish. Thereafter, the 2020-2021 season has been cancelled outright due to the ongoing epidemiological crisis; Sales per skiing day demonstrated significant growth from the 2014-2015 winter season up to and including the 2018-2019 winter season, growing by 33% annually on average in this period. It even registered modest growth (4%) in the 2019-2020 season.