Georgia, a small country in the Caucasus region, has been expanding its foreign trade with various countries in the world. In 2023, the country recorded a 12.5 percent increase in its trade turnover with goods, reaching 21,529.0 million USD. However, the country also faced a negative trade balance of 9,347.8 million USD, which is 43.4 percent of its trade turnover. Who are the main trade partners of Georgia, and what are the trends and challenges of its trade relations?
Turkey: The Largest Trade Partner of Georgia
Turkey has been the largest trade partner of Georgia for many years, accounting for 13.8 percent of its total trade in 2023. The trade volume between the two countries amounted to 2,979.3 million USD, with exports from Georgia reaching 1,054.7 million USD and imports from Turkey reaching 1,924.6 million USD. The main products exported from Georgia to Turkey are copper ores and concentrates, ferroalloys, wine, mineral waters, and nuts. The main products imported from Turkey to Georgia are vehicles, machinery, iron and steel, textiles, and plastics.
The trade relations between Georgia and Turkey are based on a free trade agreement signed in 2008, which eliminated tariffs and quotas on most goods. The two countries also cooperate in various fields, such as energy, transport, tourism, culture, and education. Turkey is one of the main investors in Georgia, with projects in infrastructure, energy, banking, and telecommunications. Turkey also supports Georgia’s integration into NATO and the EU, and backs its territorial integrity and sovereignty.
Russia: The Second Largest Trade Partner of Georgia
Russia is the second largest trade partner of Georgia, accounting for 11.1 percent of its total trade in 2023. The trade volume between the two countries amounted to 2,401.5 million USD, with exports from Georgia reaching 1,006.2 million USD and imports from Russia reaching 1,395.3 million USD. The main products exported from Georgia to Russia are wine, mineral waters, spirits, nuts, and fruits. The main products imported from Russia to Georgia are oil and gas, machinery, vehicles, iron and steel, and wood.
The trade relations between Georgia and Russia have been complicated by the political and security issues between the two countries, especially after the 2008 war over the breakaway regions of Abkhazia and South Ossetia. In 2006, Russia imposed a ban on Georgian wine and mineral water, which was lifted in 2013. In 2014, Russia signed a treaty with Abkhazia and South Ossetia, which Georgia considers as a violation of its sovereignty and territorial integrity. In 2019, Russia suspended direct flights to Georgia, following anti-Russian protests in Tbilisi. Despite these tensions, the two countries have maintained trade and economic ties, and have resumed dialogue through the Geneva International Discussions.
USA: The Third Largest Trade Partner of Georgia
The USA is the third largest trade partner of Georgia, accounting for 9.5 percent of its total trade in 2023. The trade volume between the two countries amounted to 2,046.3 million USD, with exports from Georgia reaching 1,091.4 million USD and imports from the USA reaching 954.9 million USD. The main products exported from Georgia to the USA are ferroalloys, vehicles, carpets, nuts, and spirits. The main products imported from the USA to Georgia are aircraft, machinery, vehicles, pharmaceuticals, and plastics.
The trade relations between Georgia and the USA are based on a bilateral trade and investment framework agreement signed in 2009, which aims to enhance trade and investment cooperation and address trade barriers. The two countries also cooperate in various fields, such as security, democracy, human rights, energy, education, and health. The USA is one of the main supporters of Georgia’s sovereignty and territorial integrity, and its aspirations to join NATO and the EU. The USA is also one of the main donors of Georgia, providing assistance in economic development, governance, defense, and humanitarian aid.
Other Trade Partners of Georgia
Besides Turkey, Russia, and the USA, Georgia has other trade partners in different regions of the world. In 2023, the top ten trade partners of Georgia also included:
- Germany (1,478.9 million USD)
- South Korea (1,145.6 million USD)
- Japan (1,038.7 million USD)
- Vietnam (1,012.4 million USD)
- Singapore (1,001.2 million USD)
- India (987.3 million USD)
- Thailand (965.4 million USD)
The trade relations between Georgia and these countries are based on various bilateral and multilateral agreements, such as the Association Agreement with the EU, the Deep and Comprehensive Free Trade Area with the EU, the Generalized System of Preferences with the USA, the Free Trade Agreement with China, and the World Trade Organization membership.
Challenges and Opportunities for Georgia’s Trade
Georgia’s trade with the world faces several challenges and opportunities in the current global context. Some of the main challenges are:
- The negative trade balance, which indicates that the country imports more than it exports, and thus depends on external sources of financing.
- The dependence on a few products and markets, which makes the country vulnerable to external shocks and fluctuations in prices and demand.
- The non-tariff barriers, such as sanitary and phytosanitary measures, technical regulations, and standards, which limit the access of Georgian products to some markets.
- The geopolitical risks, such as the unresolved conflicts with Russia over Abkhazia and South Ossetia, the regional instability in the Middle East and the South Caucasus, and the global tensions between major powers.
Some of the main opportunities are:
- The diversification of products and markets, which can increase the competitiveness and resilience of the Georgian economy, and create new jobs and income.
- The integration into regional and global value chains, which can enhance the quality and value-added of Georgian products, and attract more foreign direct investment and technology transfer.
- The promotion of trade facilitation and digitalization, which can reduce the costs and time of trade, and improve the transparency and efficiency of customs and border procedures.
- The development of trade-related infrastructure and services, such as transport, logistics, energy, tourism, and finance, which can improve the connectivity and accessibility of Georgia to the world.
Georgia’s trade with the world is a key factor for its economic growth and development. The country has been pursuing a liberal and open trade policy, and has established trade relations with various countries in different regions. However, the country also faces several challenges and opportunities in its trade performance and potential. The country needs to address these challenges and seize these opportunities, in order to enhance its trade competitiveness and integration into the global economy.
