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In July, the economy shrank by 5.5%

By Natalia Kochiashvili
Tuesday, September 1
The National Statistics Office Geostat published preliminary estimates, according to which in July 2020, compared to the same period last year, the Georgian economy shrank by 5.5%. The average for the first 7 months of 2020 is -5.8%.

It is noteworthy that the pace of economic decline in recent months has been declining. In particular, the decline of the Georgian economy in April was -16.6%, in May - -13.5%, and in June -7.7%.

Geostat also conducts monthly preliminary estimates of economic growth, which are calculated based on departmental statistics, in particular, turnover, fiscal and monetary data of VAT-paying enterprises.

According to the report, the total turnover of VAT-paying enterprises in July reached GEL7.2 billion, which is a decrease of 3.9% compared to the same period last year.

A record decline in the turnover of VAT-paying enterprises was recorded in April, when the turnover decreased by 32.8% to GEL4.2 billion, in May the turnover decreased by 22.2% to GEL5.4 billion, and in June it decreased by 6.2% and the turnover of enterprises reached GEL6.5 billion.

Gogita Todradze, Executive Director of the National Statistics Office, spoke in detail about the factors contributing to the economic downturn.

He said the growth in the mining industry was related to the growth of non-ferrous metal ores. As for the positive trends in the manufacturing sector, it was mainly related to the increase in the production of mineral fertilizers, beverages, tobacco and clothing.

There was a decline in all other sectors - despite the ongoing infrastructure projects in the construction sector, there was a declining trend in the construction of both residential and non-residential buildings.

Consequently, the volume of work related to the development of construction projects has been reduced. Also, in 7 months, the number of construction permits decreased by about 17% and the total area of permits decreased by 27%, while the number of commissioned facilities decreased by about 35%.

The decline in the transport sector was largely related to the functioning of air and rail transport, as well as the handling of freight transport and the reduction of the volume of related services.

In the hotels and restaurants sector, the decline in revenues was mainly due to a decrease in the number of international visitors which reduced by about 95%. In July 2020, a total of 46 000 visits were made by visitors, while in the corresponding period of last year, this figure exceeded 882 000. Consequently, the turnover of travel agencies, tour operators and booking companies decreased.

There was also a downward trend in the arts, entertainment and leisure sectors, mainly due to declining turnover of gambling companies, but also declining revenues from sports, entertainment, leisure and various cultural institutions.

According to Geostat, 3,935 units of new enterprises were registered in July, which is 5.2% less than in the same period last year.

It should be noted that the statistics of newly registered enterprises had a decreasing trend during the year; The only exception was June, when 10.7% of new enterprises were registered, compared to the same period last year.

A record 92.9% decline in new enterprise registrations was recorded in April. The main reason for this was the state of emergency declared in the country due to Covid-19.

As of the start of July 782,437 economic entities are registered in Georgia, 185,790 are active. According to the organizational-legal form, 43.5% of the active entities are limited liability companies, while 51.6% are individual entrepreneurs.

Geostat also released Criminal Statistics figures in July 2020. The criminal prosecutions were launched against a total of 1,933 persons in July (an increase of 9.3% compared to July 2019), including 34 juveniles.