Slovakia’s trade balance with Georgia is minimal. There is potential especially in the areas of tourism, energy and foreign direct investment
The country, situated on the southern slopes of the Caucasus, was one of the first areas where human civilisation was established. Georgia has always been a gateway connecting Europe and Asia. And it had much to offer – from wine production, textiles and gold mining.
After seven decades in the Soviet Union, it is moving ever more rapidly towards the West. It is reconnecting not only to Eurasian trade routes but also to the energy infrastructure, with gas exports from its south-eastern neighbour Azerbaijan to Turkey and especially to Europe playing a major role.
Energy export
In addition to the TANAP pipeline, major oil pipelines flow through the country, but Georgia also offers attractive opportunities to build its own energy dominance. The Caucasus has abundant water resources, which generate up to 80 percent of the country’s electricity production.
Hydroelectric power plant, Georgia
The potential for solar and wind power plants, especially off the Black Sea coast, which could theoretically produce the green hydrogen that the EU is so interested in, is no less.
Georgia’s strategic location also brings significant commercial potential. Although it has a buoyant relationship with Turkey, China, Russia and Azerbaijan, accounting for over ten per cent of the trade balance, the country’s largest trading partner is the European Union. Georgia’s exports are close to 40 percent of GDP, imports even 80 percent, creating a long-standing high trade deficit.
The annual trade deficit of roughly five billion euros is offset by high inflows of foreign investment and the services sector. Georgia is one of the most attractive countries in terms of the ratio of natural beauty to the cost of holidays. It is a destination that many Europeans are yet to discover, not only because of its unique natural wealth, but also because of its history dating back millennia.
Tbilisi
More than nine million people visited the country before the pandemic. By comparison, Slovakia was visited by six million tourists. Most of them are heading to the capital Tbilisi, to the Black Sea coast in Batumi, to the well-known regions of the Caucasus or to the wine regions.
Batumi
One of them – Kachetia – is said to be the cradle of wine, which began to be produced there more than eight thousand years ago.
Kachetia
Cheap and high-quality wine is still a strong export commodity of the country, as are hazelnuts and brandy. Agriculture accounts for almost eight percent of GDP.
However, more than a fifth is generated by industry, which focuses on the production of metals and alloys, especially copper and gold. Manufacturing and textiles also play an important role. Metals are also an attractive commodity for European importers, although China is the primary source of investment and exports.
Roughly two billion in foreign direct investment flows into the country annually, which is currently already higher than the volume flowing into Slovakia. In addition to the manufacturing industry, it is mainly directed to the energy sector, but also to real estate development, transport and logistics. The Georgian government offers not only the concept of free industrial zones with specific concessions, but above all a long-term attractive investment environment. Georgia is one of the region’s leaders in the quality of the economic environment, which is also reflected in its high ranking in world rankings.
The largest Slovak investor in Georgia is Nodar Giorgadze, an entrepreneur with Georgian roots, doing business under the brand name Gino. The successful Beshenova project is being replicated on an even larger scale in the Tbilisi area. It contributes to foreign direct investment in the country, along with other projects such as hotels, restaurants and green energy projects.
Growing cooperation
Eximbanka is a partner of some of the projects, which in recent years has supported projects of Slovak exporters in the territory of Georgia in the amount of more than EUR 50 million, the dominant part of which were projects related to construction activities. The state-owned institution can support these through direct financing or by providing cover for projects financed by commercial banks.
