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Friday, 21 October 2016


Junk cars save Tbilisi

2011-07-28 21:49

Junk cars save Tbilisi. 20185.jpegThe Georgian statistics service has published data on the structure of the country's foreign trade balance. For the first time the export volume exceeds USD 1 bn with the turnover growing by 38%. Certainly, Georgian officials could not neglect such "juicy" figures. PM Nica Gilauri was overly proud to announce the country's new macroeconomic achievement. Yet, giving a thorough look at the Gruzstat data things become clear: Mr. Gilauri had better keep silent.


The rise in foreign trade turnover is primarily due to imports, and the exports structure includes such "hi-tech" goods like second-hand cars and metal scrap.

Figures of the country's statistics agency explicitly demonstrate that Georgian economy is heavily dependent on imports. The share of imported goods in the overall foreign trade turnover amounting to USD 4 bln 711 mln in the first semester, is 75% (USD 3 bln 79 mln). With exports revenues amounting to USD 1 bln 37 mln over the first six months of 2011, the negative trade balance is USD 2 bln 42 mln. An economy minister in a European country that Georgia loves to refer to would submit resignation with figures like these. Yet, Georgian bureaucrats, as we know, are of a different kind.

Probably, things are not that bad? Maybe it's ok that Nica Gilauri boasts of statistics? After all, the impressive increase in exports (44%) has made its contribution to the growth of turnover. Yet, seeing the monstrous slant of the trade balance toward imports, these vaunted figures are only one third of the imported volumes. That is why, despite the boost in exports in absolute figures, the negative balance in the first half of the year has also grown by one third - 34% as compared to the same period of 2010. Besides, the exports have grown mostly due to the cheapening dollar, the currency of Georgian exports, not because Georgians now sell more abroad. That's the trick.

At all events, the Transcaucasian republic keeps exporting. Let's see what exactly is sold abroad. According to the statistics agency, light vehicles are ranked first in the exports structure (USD 246 mln) making a quarter of all goods sold to foreign countries. When does Georgia find time to become a serious car manufacturer and ship its products to external markets?

The answer is banal and sad. Georgia's economy is best at manufacturing semi-finished products. The large part of cars in the exports structure is the consequence of massive resale of second-hand cars imported on incentive duty rates to Georgia and offered on the car market 30 km away from Tbilisi known to the entire CIS. It is not incidental that cars are ranked second in the Georgian imports after oil and oil products.

Thanks to the re-export of second-hand cars the only CIS country with which Georgia has a positive trade balance is Kazakhstan. The most significant increase in exports (60%) was evidenced in June. In the run-up to cancellation of incentive imports duties (from July 1) for second-hand cars in Kazakhstan, citizens of this state were quick to buy all more or less operable junk cars in Georgia.

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