Georgian Sectors Set to Boost Exports to Europe Despite Challenges

A recent study commissioned by the European Union and United Nations reveals that several Georgian economic sectors are well-positioned to expand exports to Europe. The report, titled “Georgia’s Economy Sectors with High Growth and Export Potential,” suggests a strong desire among Georgian businesses to engage with European markets, despite concerns among many Georgians that the government is damaging the country’s relationship with the EU.

Based on interviews with industry stakeholders, the report identifies the wine and beverage sector as having significant export potential. It also highlights transport, telecoms/IT, mining, and clothes manufacturing as sectors with promising export opportunities.

Despite the association agreement signed between Georgia and Europe in 2014, the report indicates that Georgian companies have struggled to fully exploit preferential trade opportunities. Ongoing logistical challenges have hindered westward trade, leaving Georgian exporters, including winemakers, reliant on traditional markets such as Russia and Turkey.

The report states that the main obstacles to EU-bound export growth include obtaining necessary certifications and meeting EU quality and standard requirements. Other challenges involve a lack of information on export potential and procedures, as well as insufficient production capacity for export.

Davit Keshelava, head of macroeconomic policy research at the International School of Economics in Tbilisi, noted that companies need capital to overcome these barriers. However, the capital market in Georgia is underdeveloped, with expensive bank loans being the primary source of funding. Keshelava mentioned that access to finance remains a significant issue.

Political uncertainties have further complicated the economic landscape. Georgia’s progress toward EU accession is currently stalled, with officials in Brussels and Washington. Public opinion surveys show strong support for Georgia’s integration with Western institutions.

The state statistics agency, Geostat, reported strong GDP growth in the first half of 2024 compared to the same period in 2023, despite a 6.7% year-on-year decline in the value of FOB exports and a 1.8% decline in external merchandise trade turnover during the first six months of 2024.

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