Georgian Macro Economy 2008
and Current Trends
April 2009

Annual GDP Growth Rates
 Average annual real GDP growth rate since 2004 is 7.8%
 Since 2004, real GDP has increased by 45%
Nominal GDP, GEL mln (LHS) Nominal GDP, US$ mln (LHS) Real GDP growth rate (RHS)
25,000 14%
12.3%
12%
20,000
21,308.7
9.6% 9.4% 10%
19,069.6
16,993.8
15,000 8%
13,789.9
5.9%
12,797.0
6%
13,072.8
11,620.9
10,000
10,171.9
9,824.3
4%
7,761.7
6,411.0
5,000
5,124.7
2%
2.5%
2.1%
0 0%
2004A 2005A 2006A 2007A 2008A 2009F
Source: Statistics Department of Georgia, Ministry of Finance of Georgia
1
Georgian Macro Economy 2008 and Current Trends April 2009

Quarterly GDP Growth Rates
Quarterly Real GDP Growth Rate
Decline in real GDP
18% growth rate was
13.7%
caused by the
15% 12.6% 13.0% 11.7%
11.1%
11.0% 2008 August
12% 9.2% 9.9%
10.1% 10.7%
9.2% 9.1% 8.3%
8.6% conflict and Global
9% 7.4% 7.2% 7.1%
Financial Crisis
6% 5.1%
3%
0%
-3%
-2.5%
-3.9%
-6% 2.1%
12.3%
9.4%
5.9% 9.6%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
'04 '04 '04 '04 '05 '05 '05 '05 '06 '06 '06 '06 '07 '07 '07 '07 '08 '08 '08 '08
Source: Statistics Department of Georgia
However, relatively
stable trend has
Nominal GDP (quarterly figures)
been seen in the
4 nominal GDP
performance from
3
3.5
3.4
3.3
the second quarter
3.1
US$ bn
2.7
2.7
of 2008
2
2.4
2.3
2.1
2.0
1.9
1.8
1.7
1.6
1.5
1.5
1
1.4
1.4
1.2
1.0
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
'04 '04 '04 '04 '05 '05 '05 '05 '06 '06 '06 '06 '07 '07 '07 '07 '08 '08 '08 '08
Source: Statistics Department of Georgia
2
Georgian Macro Economy 2008 and Current Trends April 2009

Fiscal Revenue Performance
Fiscal revenue collection
2007 2008 2009
700

573.2 In march 2009, despite the Personal
600
499.5 Income Tax cut by 5% to 20% from 1
500
January 2009 (leaving GEL250 mln
379.5
400 303.5 in private sector), tax revenues were
GEL mln
319.6
305.5
as high as GEL320 mln, down only
263.2
266.4 266.0
300
11% y-o-y, or GEL41 mln
200
100
 In March 2009, fiscal revenue
0 showed remarkable performance -
rose by15% y-o-y to GEL573 mln
Jan Feb Mar
Source: Statistics Department of Georgia
Tax revenues collection
2007 2008 2009
400 361.1
350 320.1
300 264.0
250
203.1
GEL mln
184.0 178.7
200 166.3
158.8
163.0
150
100
50
0
Jan Feb Mar
Source: Statistics Department of Georgia
3
Georgian Macro Economy 2008 and Current Trends April 2009

Nominal GDP by Sectors
Nominal GDP Performance by Sectors (US$ mln)
Agriculture Mining and quarrying
Industry Electricity, gas and water supply
Nominal GDP has boosted by

Construction Transportation
about 150% since 2004
Communications Financial intermediation
Real estate Healthcare
1,500
Economy remains highly

1,200
diversified
US$ mln
900
All sectors contribute to

600
economic growth
300
0
2004 2005 2006 2007 2008
Source: Statistics Department of Georgia
Nominal GDP Breakdown by Sectors (%)
Agriculture Mining and quarrying
Industry Electricity, gas and water supply
Construction Transportation
Communications Financial intermediation
Real estate Healthcare
20%
16%
12%
8%
4%
0%
2004 2005 2006 2007 2008
Source: Statistics Department of Georgia
4
Georgian Macro Economy 2008 and Current Trends April 2009

GDP Per Capita
Annual GDP per capita (US$) GDP per capita
continues its
3,500
steady growth
2,920.3
3,000
2,314.6
2,500
1,763.5
2,000
US$
1,483.5
1,500 1,187.6
1,000
In 2008, GDP per capita

increased by 26.2% y-o-y to
500
US$2,920.3
0
2004A 2005A 2006A 2007A 2008A
Source: Statistics Department of Georgia
GDP per capita has increased by

circa 146% since 2004
Annual GDP per capita (PPP US$)
6,000
4,851
4,694
5,000
4,038
3,644
4,000
3,242
US$
3,000
2,000
1,000
0
2004A 2005A 2006A 2007A 2008A
Source: International Monetary Fund
5
Georgian Macro Economy 2008 and Current Trends April 2009

Current Account Deficite
CAD Total private capital inflows (TPCI) Donor Inflows (DI) CAD as % of GDP CAD + TPCI + DI as % of GDP
5,000 30%
4,000
20%
942.0
3,000
276.2
7.7% 7.8%
2,000 10%
261.7 850.0*
5.4%
3.1%
5.6%
1.7%
US$ mln
1,000 1,300.0
2,905.0
2,283.8
176.7 1,506.8
160.3 0.1% 0%
351.0 98.3 734.8
479.6
0 -353.6
-383.3 -709.5 -1,174.6
-6.9%
-1,000 -10%
-2,008.7 -2,134.0
-2,850.5
-9.6% -11.1%
-2,000 -15.1% -20%
-16.3%
-3,000 -19.7%
-22.3%
-4,000 -30%
2003 2004 2005 2006 2007 2008 2009F
* Donor inflows in 2009 is adjusted according to the banking sector foreign debt outflows
Source: National Bank of Georgia
Imports of goods & services Exports of goods & services Remittances
8,000
7,497.0
6,000
5,916.9
US$ mln
5,247.9
955.2
4,000 4,412.9 755.4
3,318.1 730.0
420.5
2,492.8 315.4
2,000 1,865.3 3,691.3
212.7 3,182.4
165.8 2,583.9
2,551.6
2,187.5
1,646.9
1,288.5
0
2003 2004 2005 2006 2007 2008E 2009F
Source: National Bank of Georgia
6
Georgian Macro Economy 2008 and Current Trends April 2009

FDI Inflows
Quarterly FDI Inflows
 In private interviews at least US$1.1 bn FDI
were already confirmed by 30 companies
for 2009, even according to the pessimistic
scenario
800
702.9
Net FDI forecast for
2009 is at US$1.1 bn
525.2
600
489.1
456.7
430.2
421.4
401.5
US$ mln
350.0
320.0
306.9
400 280.7
250.0
188.3
180.0
178.9
150.0
146.0
105.9
200
89.4
75.6
0
Q1 '09F
Q2 '09F
Q3 '09F
Q4 '09F
Q3 '06
Q4 '06
Q1 '07
Q1 '05
Q2 '05
Q3 '05
Q4 '05
Q1 '06
Q2 '06
Q2 '07
Q3 '07
Q4 '07
Q1 '08
Q2 '08
Q3 '08
Q4 '08
Source: Statistics Department of Georgia
7
Georgian Macro Economy 2008 and Current Trends April 2009

FDI Inflows, cont'd
Cumulative net FDI breakdown by origin Net FDI
2004 - 2008 Net FDI Net FDI as % of GDP
Country US$ mln % 2,500 25%
UK 577.0 10.6%
19.8%
Turkey 501.5 9.2%
2,000 20%
USA 491.6 9.0% 2,014.8
15.3%
Netherlands 456.5 8.4%
US$ mln
1,500 15%
Kazakhstan 405.3 7.4%
UAE 395.6 7.3% 9.7% 1,293.7
British Virgin Islands 313.9 5.8% 1,190.4
1,000 10%
7.0% 10.1%
Cyprus 252.3 4.6%
Bahamas 246.4 4.5%
500 5%
Czech Republic 213.8 3.9%
499.1 449.8
3,853.9 70.7%
Subtotal
0 0%
1,593.9 29.3%
Other
5,447.8 100.0%
Total 2004 2005 2006 2007 2008
Source: Statistics Department of Georgia
Source: Statistics Department of Georgia
FDI breakdown by sectors (‘07– ‘08)

Other, 3.2%
Cumulative FDI of US$5.4 bn since 2004 – 43% of
Agriculture, 0.8%
2008 GDP
Transports &
Banking, 4.5%

Communications
As a result per capita of US$1,238
, 23.6%

Construction, Very diversified among sectors and sources
14.6%
Energy, 18.6%
Manufacturing,
16.8%
Services, 17.8%
Source: Statistics Department of Georgia
8
Georgian Macro Economy 2008 and Current Trends April 2009

Real Estate Market Performance
Secondary transactions Real estate market
2007 2008 2009 has resumed
25
significantly since
# of transactions '000
August 2008 and
20
20.5 continues being
19.2 18.3 18.8
15 healthy
15.3
14.5
13.8
10 12.1
11.8
5
0
Jan Feb Mar
Source: National Agency of Public Registry
 In significant cases of
Mortgages
distress sales on the market
2007 2008 2009
8
 Mortgage market alive
# of issued mortgages '000
7.0
6
6.1
4
4.4
4.1
3.7
3.3
2.7
2
2.7
2.6
0
Jan Feb Mar
Source: National Agency of Public Registry
9
Georgian Macro Economy 2008 and Current Trends April 2009

Real Estate Market Performance, cont'd
# of building permits issued
2007 2008 2009
140
120
123 124
 Optimistic expectations about
100 113 111
the future
96
80 92 86 86
 In 2008, number of permits
60
61 issued for construction rose by
40
59% to 2,022. In Q1 2009, it
20
showed stable growth
0
performance
Jan Feb Mar
 Areas permitted for construction
Source: Urban Planning Department of Tbilisi
rose in 2009 compared to 2008,
Permitted construction areas (sq.m) however market has been seeing
demand for small construction
2007 2008 2009
250,000 areas
200,000
208,946
173,239
150,000
140,306
131,865
128,460
100,000
116,746
115,842
104,864
71,962
50,000
0
Jan Feb Mar
Source: Urban Planning Department of Tbilisi
10
Georgian Macro Economy 2008 and Current Trends April 2009

Main Transportation Figures
Handled TEUs
Cargo transportation
2007 2008 2009 2007 2008 2009
4 25,000
20,000
3 3.3 3.3 3.3
3.3 20,785
19,701
3.1
Tons mln
2.8 15,000
15,115
2 14,100
13,586 13,452
10,000
1 5,000
0
0
Jan Feb
Jan Feb
Source: Road Department of Georgia
Source: Road Department of Georgia
Handled cargo
 Key transportation trends have been resuming
2007 2008 2009

1.6 In January – February 2009, number of handled
1.4 1.51 1.52 1.51 TEUs showed a slight decline y-o-y
1.5
1.4

1.2 1.3 In January – February 2009, cargo transportation
1.0
Tons mln
declined a bit compared to 2m 2008

0.8
In January – February 2009, handled cargo
0.6
performed almost the same compared to the same
0.4
period of the previous year
0.2
0.0
Jan Feb
Source: Road Department of Georgia
11
Georgian Macro Economy 2008 and Current Trends April 2009

Vehicle Market
Vehicles registrations Primary registration of vehicles
2007 2008 2009 2007 2008 2009
20,000 8,000
18,473
7,174
# of transactions
15,000 6,000
14,844
5,500
13,307
13,010
5,212
12,191
10,000 4,000
11,422
4,385
4,205
4,048
8,615
3,331
5,000 2,000
4,361
1,869
198
180
0 0
Jan Feb Mar Jan Feb Mar
Source: Ministry of Internal Affairs Source: Ministry of Internal Affairs
Secondary transactions

2007 2008 2009
Car market has been showing resilience
12,000
11,299
10,000
9,632
8,000
8,860
8,625
7,807
7,217
6,000
4,000
4,567
2,492
2,000
18
0
Jan Feb Mar
Source: Ministry of Internal Affairs
12
Georgian Macro Economy 2008 and Current Trends April 2009

The Reasons for Resilience Economy
 Diversified trade and investment
 Donor inflows
 IMF program
 Energy security
 Stable banking sector
13
Georgian Macro Economy 2008 and Current Trends April 2009

Contacts
Vakhtang Lejava Goga Melikidze
Advisor to Prime Minister of Georgia
Chief Advisor to Prime Minister of Georgia
Head of Advisory Group (+995 32) 93 46 32
vlejava@geo.gov.ge g.melikidze@mof.ge
14
Georgian Macro Economy 2008 and Current Trends April 2009