24.Oct .2022 15:00

What Economic Ties Do Georgia And Azerbaijan Have?

What Economic Ties Do Georgia And Azerbaijan Have?
views 474

President of Azerbaijan Ilham Aliyev paid an official visit to Georgia.

BMG got interested in what economic ties Georgia and Azerbaijan have. 

Today, the economic relationship between Georgia and Azerbaijan is driven by energy cooperation, because Azerbaijan supplies more than half of its export goods to the world market through pipelines passing through Georgia.

Georgia receives more than 80% of natural gas from Azerbaijan, regarding which there are agreements with Shah-Deniz Consortium and "SOCAR". The so-called The "optional" and "additional" gas tariff, which Georgia buys from Azerbaijan, is not publicly known, although it is significantly lower compared to other countries.

At the same time, Azerbaijan is one of the largest export markets for Georgia, in the 9 months of 2022, a total of $489 million worth of goods were exported from Georgia to Azerbaijan, which is 22% more than the previous year. With this indicator, Azerbaijan took the second place after China in the export ranking of Georgia.

The main trade goods from Georgia to Azerbaijan are cars, where 23 thousand cars worth USD 222 million were exported in 9 months of the current year.

As for imports, this year Georgia bought goods worth USD 471 million from Azerbaijan, of which USD 246 million came from natural gas and USD 50 million from oil products. Accordingly, so far, Georgia's exports exceed imports, although an increase in gas imports is expected in the last months of the year, therefore the trade balance with Azerbaijan will also change.

Over the years, Azerbaijan has been one of the largest investors in Georgia related to the construction of the Shah Deniz pipeline, and in 2015, a peak investment of USD 581 million came from Azerbaijan, but in the following years, FDI decreased and it amounted to only USD 3.5 million in 2021.

As for tourism, before the pandemic, visitors from Azerbaijan generated a significant part of the revenues in the tourism sector of Georgia. In 2019, a total of 1.5 million Azerbaijani citizens visited the country, making Azerbaijan the number one tourist destination. However, due to the pandemic, the land border between the two countries was closed, which has not yet been fully opened, due to which a total of 112 thousand Azerbaijani visitors visited Georgia in 9M2022.