Due to the COVID-19 pandemic, global FDI is expected to fall by 30-40% in 2020 (UNCTAD), while the decrease in Georgia is forecast at 19% (IMF); Net FDI inflows have been decreasing in Georgia since 2017, based on both, yearly and Q1 data; Net FDI inflows in Georgia experience volatility over time, due to large one-off investment projects; Georgia has been leading among EaP countries in terms of the share of FDI in GDP in 2017 and 2018; Net FDI inflows decreased by 41.7% in Q1 of 2020, compared to Q1 in 2019, mainly due to COVID-19 pandemic.

Unemployment has remained one of the prioritised issues in Georgian economy since its independence. Moreover, Georgian economy was characterised with high unemployment rates even during periods of economic upturn prior to 2008 global financial crisis. COVID-19 is likely to impact job market and income of people employed, therefore, it is important to consider their pre-pandemic state. This bulletin overviews the unemployment and income figures of 2016-2019. The period of 2016-2019 is characterised with significant trends and issues such as: • Growth in average monthly incomes;• Slight decrease in unemployment rate;• Increased share of hired individuals in labor force;• Slight decrease of share of self-employed individuals in labor force.

PMC Research forecasts that budget deficit as a % of GDP will increase from 3.1% to 9.8% in the optimistic scenario, while in the less pessimistic and very pessimistic scenarios it will amount to 11.2% and 14.1%, respec­tively.                                         Recommendations: Planned budget spending should be reprioritized to provide space for COVID-19-related expenditure; Fiscal measures should be targeted to assist the hardest-hit households and firms. The government should ignore lobbying pressure from different sectors and businesses seeking benefit from fiscal policy package; Effective public financial management is key to safeguarding against fiscal risks and enhancing the Government’s capacity to respond to the crisis.

If the optimistic scenario proves true, Georgia’s real economy is expected to shrink by 4.3%. The Georgian economy is expected to decrease by 8% in case of less pessimistic scenario, while in the event of the very pessimistic scenario, the expected fall is 12.9%.  In the optimistic scenario, Georgia’s real GDP growth is expected to drop by 0.43% every week, while the weekly loss is more pronounced for the less pessimistic (-0.47%) and very pessimistic (-0.5%) scenarios respectively. The experiences of some European countries should be taken into account in the process of phased lifting of the restrictive measures.

The data analysis shows that in 2019, compared with the previous year, Georgia’s export has increased, while the country’s import decreased. In 2019, Georgia’s external trade balance amounted to negative $5.2 bln, which is a $0.49 bln decrease compared to the corresponding period of 2018.

In the past few years several major regulations were implemented both by the government and the National Bank of Georgia. In this newsletter, possible implications of imposed lending constraints on the private sector are presented.

In the past year, in response to rising levels of private debt, the National Bank of Georgia (NBG) enacted new regulations to curb excessive indebtedness. The impacts of the implemented regulations are as yet unclear but generally the reaction in the private sector has been negative. In this newsletter, a brief overview of the possible implications of these lending regulations are presented.

The aim of this newsletter is to briefly examine the roots of the gender pay gap in Georgia, to reveal the differences of average wage in various sectors, distributions of labour force according to gender and hourly wages for males and females. Due to data limitations, only the wages of hired employees are considered.

The first quarter of 2019 produced some interesting figures in Georgia’s external trade. In this period, external trade was recorded with a total of 121 countries. The data analysis shows that in the first quarter of 2019, compared with the corresponding period of the previous year, Georgia’s export has increased while the country’s import decreased. The analysis of Georgian trade based on import origin and export destination countries reveals that the volume of export has increased the most to Russia while the biggest decrease in imports was recorded with France.

Analysis of FDI into Georgia for 2014-2018 revealed the following general findings: In 2018, the financial, transport and communications, and energy sectors attracted the most FDI; In 2018, Azerbaijan, the United Kingdom, and the Netherlands were the countries investing most in Georgia; Based on the cumulative amounts of FDI for the past five years, transport and communications (28.4%) is the most attractive sector for FDI in Georgia, while the agricultural sector is the least attractive (0.8%); Based on the cumulative amounts, countries investing most in Georgia are: Azerbaijan, Netherlands, the United Kingdom, Turkey and USA. The shares of FDI from China and the EU in the total FDI into Georgia have been increasing since 2017; During 2017-2018, the share of reinvestments in the total FDI into Georgia increased, while the shares of equity and debt instruments decreased.