Foreign Direct Investment

According to UNCTAD's World Investment Report 2021, FDI flows to Georgia in 2020 decreased to USD 617 million, more than halved compared to 2019, following the global economic crisis triggered by the Covid-19 pandemic. At the same time, the total stock of FDI was estimated at USD 18.6 billion. FDI is largely supported by natural resources. More than 30% of inflows are related to extractive industries. Trade and finance attract 20% and 11% of FDI inflows respectively. Georgia attracts investments from several countries. Azerbaijan is the largest investor due to the ongoing construction of the Shah-Deniz pipeline. The majority of FDI flows generally come from the UK, Russia, Turkey, the Czech Republic and the United Arab Emirates (National Statistics of Georgia, 2021). However, the country is increasingly opening up to Asian investment. According to provisional data from the National Statistics Office of Georgia, in 2021 FDI inflows reached USD 728.4 million, compared to USD 1.3 billion recorded before the pandemic.

UNCTAD estimates that FDI flows into Georgia will grow moderately in the coming years, supported by rising commodity prices and stronger economic growth. To attract investors, the country offers many tax and legislative advantages. The Georgian economy has been almost fully liberalised and currently offers an attractive economic climate for investment. Overall, business and investment conditions are sound; however, there is an increasing lack of confidence in the judicial sector. Corruption, historically very present in the intermediate levels, has been largely eradicated - a major obstacle to attracting FDI. According to Transparency International, Georgia currently ranks 45th on the 2021 Corruption Perception Index. Georgia is the 7th easiest place to do business in the world according to the World Bank's latest Doing Business Report, one spot down compared to the previous edition. After providing cheaper electricity, strengthening the protection of minority investors and improving the resolution of insolvency problems, the country facilitated the creation of business, the payment of taxes and the execution of contracts.