The Covid-19 pandemic has reduced Georgia's economic dependence on other countries, including Russia. In 2019, Georgia received USD 1.6 billion in revenue from Russia through tourism, remittances and exports, which was 9% of Georgia's GDP. In 2020, Georgia received about USD 900 million in revenue from Russia through the same channels, which was about 5.7% of GDP, - Transparency International Georgia reports.
In 2020, Georgia's economy depended on Russia mainly through foreign trade and remittances. Particularly high dependence was observed in the export of Georgian wine and the import of Russian wheat. Georgia is less dependent on Russian electricity and gas. Moreover, Russian investments in Georgia are small.
In recent years, exports of Georgian products to Russia have increased and in 2019 reached USD 497 million. The impact of the Covid-19 pandemic on exports to Russia has been significant, and in 2020 it decreased by 11.2%. However, due to the further decline in Georgia's total exports, Russia's share in Georgian exports slightly increased - from 13.1% to 13.2%.
In 2020, Georgian wine exports to Russia decreased by 10% and amounted to USD 120 million. Moreover, Russia's share in the total export of Georgian wine decreased slightly by 0.2 percentage points and amounted to 56.8%.
Compared to 2019, in 2020, imports from Russia to Georgia decreased by 9.2%, although since 2012, imports of Russian products have almost doubled to USD 900 million. Russia ranks second in Georgia's importers after Turkey.
Up to 70% of wheat consumed in Georgia comes from Russia. Russia accounts for almost 100% of wheat imports. Compared to 2019, in 2020, wheat imports from Russia to Georgia increased by 18%.
Due to the pandemic, in 2020, the dependence of Georgia’s economy on tourism, including Russian tourists, was radically reduced. In 2020, 208,677 Russian visitors came to Georgia, which is 86% less than in 2019. Before pandemic, Georgia was most dependent on Russia through tourism. In 2019, Russian visitors spent about USD 700 million in Georgia. In 2020, this figure stood at USD 50 million.
In 2020, remittances from Russia to Georgia decreased by 15% to USD 364 million. In 2019, Russia's share in total remittances to Georgia was 24.8%, and in 2020 this figure fell to 19.3%. The decline in remittances from Russia began in 2019, as Europe has become more attractive to Georgian emigrants. In recent years, remittances from European countries have been on the rise.
Many scholars believe that Georgia's economic dependence on Russia causes some threats, as Russia has repeatedly used economic leverage against Georgia over the past 15 years. For example, in 2006 Russia cut off natural gas and electricity supplies to Georgia, then it banned the export of products from Georgia to Russia. At the end of the year, it started deporting Georgian citizens. After the events of June 20, 2019, the Kremlin banned flights from Russia to Georgia and this restriction is still in force.
Therefore, it is important to be informed about the level and trend of Georgia's dependence on Russia. Last year Transparency International Georgia has explored key areas where Georgia's economy heavily depended on Russia. These areas are: foreign trade, tourism and remittances sent by emigrants. This time we offer an updated study that highlights 2020 trends. Of particular interest to the study was the impact of the Covid-19 pandemic on the Georgian economy's dependence on Russia.
In recent years, energy dependence on Russia has become less relevant for Georgia, as Russia has not been playing a significant role in Georgia’s import of electricity and natural gas. In 2020, the share of electricity imported from Russia in total electricity consumption of Georgia was up to 4.5%. 65% of the electricity imported to Georgia came from Azerbaijan and Turkey. In 2020, the share of gas imported from Russia in Georgia’s total natural gas consumption was up to 7%.
Foreign direct investments from Russia have not been significant in recent years. In 2015-2019, the share of Russian investments in Georgia's total foreign investment averaged 3.4%. A total of USD 260 million was invested from Russia during this period. Russia invested USD 20 million in January-September 2020, accounting for 2.7% of Georgia’s total foreign investments. However, about 38% of Georgia’s foreign investments come from offshore zones, and in some cases, they were linked to the money of Russian origin.
