Ministry of Economy and Sustainable Development of Georgia

Ministry of Economy and Sustainable Development of Georgia

Economic Growth 42,000.0 36,000.0 30,000.0 24,000.0 18,000.0 12,000.0 6,000.0 0.0 GDP AND ECONOMIC GROWTH 7.2% 6.2% 6.4% 4.6% 4.8% 3.4% 2.9% 2.8% 20,743 24,344 26,167 26,847 29,151 31,756 34,029 37,516 2010 2011 2012 2013 2014 2015 2016 2017 * 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 3.5 % 4.8 % 4.9 % Average GDP growth during 2014-2016, when most of Georgia s neighbors were in or close to recession. Average economic growth in 2017 Average real GDP growth projection in 2018-2022, according to IMF Nominal GDP Real Growth GDP COMPOSITION - 2016 Education 5% Energy 3% Financial intermediation 4% Helth Care 6% Real Estate 7% Construction 8% *growth - preliminary (nominal GDP estimate) Other 17% Trade 17% Manufacturing 14% Transport & Communications 10% Agriculture 9% 2018 ECONOMIC GROWTH FORECAST, IMF 4.2% 3.5% 3.2% 2.9% 1.6% 1.3% 0.7% Georgia Turkey Ukraine Armenia Russia Azerbaijan Belarus

Economic growth 14.0% Economic growth decomposition 1 6.0% 2.0% 3.4% 4.6% 2.9% 2.8% 4.8% -2.0% -6.0% -1 2013 2014 2015 2016 2017 I-III real consumption real investments real net export of goods and services real GDP growth 3 25.0% 2 15.0% 1 5.0% Public and Private investments 2010 2011 2012 2013 2014 2015 2016 2017 * Public investments (% GDP) Private investments (% GDP) economic growth 2016 Contribution of private investments in real growth- 3.1 pp; 2017* Contribution of net export in real growth - 4.0 pp; 2010-2016 Real sector contribution in economic growth- 1.4 pp. *-9 months

Business Sector 25.0% 2 15.0% 1 5.0% 18.6% BUSINESS SECTOR 2017*, % CHANGE 19.6% 6.3% 660 640 620 600 580 560 540 520 545 4.7% 578 EMPLOYMENT IN BUSSINESS SECTOR (THOUSAND PERSONS) 605 27 thousand 5.0% 631 30 thousand 601 606 568 569 6.3% 644 38 7.0% 6.0% thousand 5.0% 4.0% 3.0% 2.0% Turnover Output Employment 500 480 I II III 1.0% 2015 2016 2017 ზრდის Growth ტემპი rate TURNOVER OF BUSINESS SECTOR OUTPUT OF BUSINESS SECTOR 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 50.5% 20.20% 14.5% 12.9% 13.8% 12.5% 5.4% 24.40 36.73 42.05 44.33 50.06 56.98 64.08 2010 2011 2012 2013 2014 2015 2016 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 44.6% 20.9% 2 15.1% 13.9% 10.7% 2.0% 13.3 19.2 23.1 23.6 26.1 30.0 34.2 2010 2011 2012 2013 2014 2015 2016 5 4 3 2 1 * 9 months of 2017 Turnover (billion GEL) change (%) Output (billion GEL) Change (%)

Employment and Unemployment 16.9% 16.3% UNEMPLOYMENT RATE 15.1% 15.0% 14.6% 2016 annual unemployment rate reached its lowest point in 13 years 12.4% 12.0% 11.8% 2009-2016 Decreasing trend of unemployment rate 2009 2010 2011 2012 2013 2014 2015 2016 597.6 636.0 AVERAGE MONTHLY NOMINAL EARNINGS, GEL 818.0 773.1 712.5 900.4 940.0 2010 2011 2012 2013 2014 2015 2016

Foreign Direct Investments FOREIGN DIRECT INVESTMENTS TOP INVESTOR COUNTRIES 2017* 10.7% 11.3% 11.0% 12.1% United Kingdom 175.0 mln USD 7.3% 5.8% 5.9% 7.0% 813.8 1,048.2 911.3 949.9 1,763.0 1,576.0 1,583.8 1,346.5 2010 2011 2012 2013 2014 2015 2016 2017 9 months Foreign direct investments (mln. USD) Foreign direct investments, GDP (%) Turkey 259.2 mln USD Azerbaijan 378.2 mln USD Manufacturing 3% Other sectors 12% Transports and communications 33% FDI by Economic Sectors - 2017* Hotels and restaurants 6% Energy sector 7% Real Estate 9% In 9 months of 2017 FDI in Georgia amounted to 1,346.5 mln USD reaching record high. In the 3 rd quarter of 2017 FDI increased by 17.6% and amounted to 594.5 mln USD. *2017 9 months Financial sector 12% Construction 18%

Reinvestments FDI REINVESTMENTS I-III Q (MLN. USD.) 591.5 85% 286.0 219.2 318.8 2014 2015 2016 2017 FDI reinvestments increased by 85% and amounted 591.5 mln. USD. In 9 months of 2017, reinvestments share in FDI amounted to 44% 7

External Sector CURRENT ACCOUNT DEFICIT CURRENT ACCOUNT ADJUSTED- PRIMARY BALANCE 12.8% 10.3% 11.7% 4.5% 6.6% 7.8% 5.8% 0.7% 5.8% 6.2% 3.9% 5.1% 10.7% 12.0% 12.8% 11.7% 2.5% 3.0% 4.6% 0.9% 8.2% 9.1% 8.2% 10.8% 7.6% 2.9% 7.1% 7.6% 12.8% 10.5% -3.4% -9.9% -5.5% -6.8% -7.2% -4.7% -6.0% -4.5% 0.1% -5.9% -5.4% -6.2% -4.0% -5.4% -5.8% -8.8% -1.6% -10.1% 2.5% 7.9% -10.1% -10.8% 2010 2011 2012 2013 2014 2015 2016 2017 I 2017 II 2017 III 2010 2011 2012 2013 2014 2015 2016 2017 QI 2017 QII 2017 QIII 2017 Q1-Q3 FDI financed deficit (% GDP) Debt financed deficit (% GDP) Curent account deficit (% GDP) current account primary - adjusted balance (% GDP) Investment revenue (% GDP) CURRENT ACCOUNT COMPONENTS, % GDP 9.4% 9.2% 8.9% 9.1% 8.7% 8.0% 7.8% 9.4% 8.3% 4.4% 5.2% 6.9% 8.7% 7.8% 10.4% 11.3% 10.3% 13.1% -5.8% -10.3% -12.8% -11.7% -10.7% -12.0% -12.8% -11.7% -22.3% -21.6% -24.2% -26.6% -25.9% -28.1% -26.9% -25.5% -1.9% -2.0% -2.9% -0.9% -1.3% -2.3% -5.0% -5.9% -7.6% 6.8% 20.9% -2.9% -22.6% -24.0% -6.4% -6.7% 2010 2011 2012 2013 2014 2015 2016 2017 Q1 2017 Q2 2017 Q3 Current Account Deficit is mainly financed by FDI In recent years significantly increased the service export share in Current Account Inflows The main share of service export comes on tourism sector. Goods Services Income Current transfers Current Account Deficit

External Trade EXTERNAL TRADE (2010-2017) 5,236.0 7,072.3 8,056.4 8,022.7 8,601.8 7,300.3 7,294.6 7,979.2 1,677.3 2,186.4 2,376.6 2,910.3 2,861.0 2,204.7 2,113.1 2,728.0-3,558.7-4,885.8-5,679.7-5,112.4-5,740.8-5,095.6-5,181.5-5,251.2 2010 2011 2012 2013 2014 2015 2016 2017 Export Import Balance Turnover SHARES IN EXPORT BY COUNTRY GROUPS, 2010-2017 56 52 51 48 40 38 41 32 33 27 23 29 18 19 21 22 15 43 35 33 38 33 27 24 2010 2011 2012 2013 2014 2015 2016 2017 In 2017 export growth amounted to 29.1%. In 2017 import increased by 9.4% Foreign trade turnover increased by 13.8%. EU % CIS % Other countries %

Tourism 3,000.0 2,400.0 1,800.0 1,200.0 600.0 0.0 INTERNATIONAL TOURISM REVENUES, MLN. USD. 2,166 1,936 1,710 1,786 27.0% 21.2% 11.9% 8.4% 4.5% 2,750 2013 2014 2015 2016 2017 10 9 8 7 6 5 4 3 2 1 International tourism revenues growth rate 7000.0 5000.0 3000.0 1000.0 INTERNATIONAL ARRIVALS (THOUSAND) 7,555 5,392 5,516 5,901 6,361 21.8% 18.8% 7.0% 7.8% 2.3% 2013 2014 2015 2016 2017 International arrivals growth rate 6 4 2 International tourism revenues 2016, 2.2 bln. USD; growth rate- 11.9% 2017, 2.8 bln. USD; growth rate- 27.0% International arrivals 2016, 6.4 mln.; Growth rate - 7.8% 2017, 7.6 mln,; growth rate - 18.8%

Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Jan 12/02/2014 12/03/2014 12/04/2014 12/05/2014 12/06/2014 12/07/2014 12/08/2014 12/09/2014 12/10/2014 12/11/2014 12/12/2014 12/01/2015 12/02/2015 12/03/2015 12/04/2015 12/05/2015 12/06/2015 12/07/2015 12/08/2015 12/09/2015 12/10/2015 12/11/2015 12/12/2015 12/01/2016 12/02/2016 12/03/2016 12/04/2016 12/05/2016 12/06/2016 12/07/2016 12/08/2016 12/09/2016 12/10/2016 12/11/2016 12/12/2016 12/01/2017 12/02/2017 12/03/2017 12/04/2017 12/05/2017 12/06/2017 12/07/2017 12/08/2017 12/09/2017 12/10/2017 12/11/2017 12/12/2017 12/01/2018 Inflation and monetary policy rate MONETARY POLICY RATE AND INFLATION 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00-1.00 Monetary policy rate Inflation Target inflation- 3%. Monetary policy rate- 7.25%. Annual core inflation end of 2017-4.7%. 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% INFLATION 2014 2015 2016 2017 2018

Fiscal Sector 5 45.0% 4 35.0% 3 25.0% 2 15.0% 1 5.0% BUDGET DEFICIT AND PUBLIC DEBT 42.4% 44.5% 45.2% 41.4% 4.5% 36.5% 34.8% 34.7% 35.5% 0.9% 2.0% 0.6% 1.1% 1.1% 1.4% 0.9% 2010 2011 2012 2013 2014 2015 2016 2017* Public debt (% GDP) Budget deficit (% GDP - GFSM 2001) 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% PUBLIC DEBT STRUCTURE - 2017 20.9% External debt Domestic debt 79.1% * Preliminary

Increasing Sovereign Ratings Moody's Investors Service has upgraded Georgia s sovereign credit rating to Ba2 from Ba3. Ba2 Stable Reasons of increasing sovereign rating Resilience to a significant economic, financial and exchange rate shock in the region in 2014-16; Stable macroeconomic environment; Institutional strength; Ongoing economic reforms. უცხოური ვალუტა სავალო ფასიანი ქაღალდების ჭერი გაიზარდა Ba1-დან Baa3-მდე; უცხოური ვალუტის დეპოზიტების ჭერი Ba1- დან Ba3-მდე. According to Standard & Poor s and Fitch, Georgia maintains stable credit rating performance at BB-. BB- Stable სავალო ეროვნული ფასიანი ვალუტა ქაღალდებისა და დეპოზიტების ჭერი გაიზარდა Baa3-დან Baa1-მდე BB- Stable

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