Many European nations have imposed flight bans on Belarusian aviation over the forced landing of a Ryanair flight on May 23. Ukraine, a non-EU country, also decided to join EU member states in imposing tough flight restrictions on Belarus. Following that, Belarus has stated about imports restriction from Ukraine. Contrary to Ukraine, no official statement has been made by Georgia regarding joining the sanctions of its “close partners and friends”. If Georgia was worried to face economic impact by joining the sanctions, how much would it cost us to synchronize with the civilized world against “Europe’s last dictator”? BMG has looked at the main economic parameters between Georgia and Belarus.
FDI from Belarus to Georgia
As official statistics data reveals, FDI from Belarus to Georgia has always been quite modest. For instance, it amounted to US$ 40,800 in 2013 and US$52,400 in 2014. Considerable increase has been recorded in 2015, when the volume reached US$ 2,639,700. Following that, it started shrinking again. For one, it amounted to US$252,300 in 2016, US$539,000 in 2017, US$691,900 in 2018 and US$ 257,100 in 2019. A notable increase has been shown during the pandemic year when despite an overall drop in FDI, it almost reached the level of 2015 and amounted to US$ 2,599,000.
Trade
Contrary to FDI flow, trade between Georgia and Belarus is standing at more impressive figures. However, Georgia still has a negative trade balance.
Export from Georgia to Belarus reached US$ 44,333.400 in 2019, US$ 47,299,700 in 2020, and US$13,827,800 during Jan-April 2021.
Top exported products during 2021, worth over 1 million US dollars, were as follows: mineral and freshwaters – US$ 1,918,800; ethyl alcohol – US$ 1,831,000; hazel and other nuts – US$ 1,675,800; parts and equipment for tractors, light vehicles, trucks, and special purpose vehicles – US$ 1,160,500; natural grape wines – US$1,006,500.
Like with many countries, Georgia has a trade deficit with Belarus. More specifically, imports from Belarus to Georgia in 2019 amounted to US$50,481.300 (negative trade balance - US$6.1 mln); in 2020 – US$ 50,136,900 (negative trade balance – US$2.8 mln). The first four months of the current year have shown an exception in terms of trade deficit and Georgia managed to obtain a positive trade balance with Belarus, with the amount of US$458, 500. Imports from Belarus during the mentioned period amounted to US$ 13,369,300.
Top imported products during 2021 were: milk and cream, worth US$ 2,016,600; ethyl alcohol – US$ 2,009,700 and medical products – US$ 1,061,300.
Remittances
In terms of remittances, Belarus is ranked 39th by the volume. During Jan-April money transfers inflow to Georgia from Belarus amounted to US$ 1, 344, 900. In 2020, the figure stood at US$ 4, 784, 800 and at US$ 4, 326, 400.
Economic Overview of Belarus, WB
In 2020, the economy of Belarus contracted by 0.9 percent year-on-year, dragged back by external headwinds that were only partially offset by demand-side policy measures. The lack of mobility restrictions, coupled with subsidized lending to SOEs (about 1.6 percent of GDP), prevented a deeper contraction of industrial output, while sustained real wage growth supported consumption.
The economic outlook of the WB is for a deepening recession in 2021 and a weak recovery thereafter, assuming negative domestic economic expectations, continued headwinds from the Russian “tax maneuver,” and the lack of structural reforms. Recently announced tax increases to contain the fiscal deficit and that of the pension system will hurt an already struggling private sector hit by the absence of support during the COVID-19 shock. With weak domestic demand expected to persist, the recovery is expected to be modest in the medium term, though slow growth will also help to compress imports and the current account deficit.
