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In January-July, exports fell by 17% and imports by 18%

By Natalia Kochiashvili
Friday, August 14
According to the operative data of the National Statistics Office, in January-July 2020, the foreign trade turnover of goods in Georgia (excluding undeclared trade) amounted to $ 6,030 billion, which is 17.6% less than the same period last year.

Of this, exports were $ 1,758 billion (down 16.8%) and imports were $ 4,272 billion (down 17.9%).

Accordingly, the negative trade balance during this period amounted to $ 2 513 billion and 41.7% of foreign trade turnover.

“Imports fell by about 33% in the second quarter,” Archil Mestvirishvili, Vice President of the National Bank of Georgia (NBG), said during the presentation of the monetary policy report.

According to the NBG, the drop in imports was caused by the decline in tourism and forecasts in this regard. According to him, the main assumption of reducing imports comes from tourism; about 40% of tourism consumption is imported, so one is that "we have better dynamics in imports than before, but on the other hand tourism indicators have deteriorated."

“We used to expect a 70% reduction in tourism and expected some recovery to begin in September. Now we expect that tourism will be restored from the second quarter of 2021; therefore, tourism revenues have decreased more, and we have changed the import forecast,” explained Mestvirishvili.

For reference, according to the monetary policy report published by the NBG, as a result of reduced foreign activity and weak domestic demand, imports of goods in the second quarter also declined significantly.

In total, in the second quarter of 2020, imports of goods fell by 32.8% year on year. Imports from countries in the region are mostly reduced from Turkey. The decline in imports continued from the US and China. In contrast, imports from the region are mostly increased due to the import of precious metals from Armenia, as well as copper ores and concentrates for re-export.

However, the monetary policy report states that in March of this year, the number of international visitors continued to decline in the second quarter due to restrictions on international air traffic and closed land borders. Overall, the number of international visitors decreased by 94.3% year-on-year in the second quarter. Amid the declining number of visitors, revenue from international travelers fell 96.7% year-on-year in the second quarter of the year. It should be noted that, like the number of visitors, revenues from international travelers are expected to be minimal before the opening of borders with all countries and the intensification of world tourism.

Due to the sharp reduction of the international market price for non-standard apples, the Ministry of Environment Protection and Agriculture will implement a non-standard apple subsidy project. According to the ministry, in order not to leave the products uninhabited during the apple harvest season, farmers do not face the problem of crop sales and earn income, a state project to promote the sale of non-standard apples was developed.

Within the framework of the project, in case of purchasing non-standard apples, the state subsidy will be given to fruit processing companies, which by December 1, 2020, will purchase 1kg of non-standard apples from individuals employed in the fruit field for not less than GEL0.22, Rural and Agricultural Development Agency will issue it.

According to them, a coordination headquarters will be set up for organized delivery of non-standard apples to enterprises.

The Prime Minister of Georgia, Giorgi Gakharia, made a statement on subsidizing the purchase of non-standard apples yesterday.

“We have to decide to subsidize the purchase of non-standard apples for 10 tetri,” he said. As the PM noted, the price of apples in international markets has fallen considerably, which is why the government, on the recommendation of the Ministry of Agriculture, will subsidize the purchase of apples.

“The main goal is that not a single gram of product produced by our farmers should be left unattended. This was the reason for our assistance to growers, and as you know, the government subsidizes the purchase of grapes this year.” Gakharia reminded.

According to the head of the government, the next step will be accommodating the apple corp. All companies that will be involved in the procurement headquarters created specifically for the accommodation of apples, will receive this subsidy in the amount of an additional 10 tetris. This program will continue until December 2020.

It was also voiced at the government’s session yesterday that customs clearance of cars will be postponed until March 2021.

The head of the government gave the relevant instruction to the Ministry of Finance and noted that there had been several relevant adjustments by the importers and the government had already taken this step once. According to him, the mentioned benefit will apply to 24,000 car owners.

"This means that as the customs clearance will be postponed, the fines will not be charged. This will apply to approximately 24,000 car owners and this is approximately a tax relief of more than 30 million,” said Gakharia noting that it is necessary to help car importers and avoid these necessary daily expenses, especially during the crisis.