A year and a half since the outbreak of the coronavirus (COVID-19) pandemic, the world has entered a new phase in which the race to vaccinate is shaping the path for post-pandemic recovery and economic growth. In this bulletin, we review the dynamics of the virus spread and the extent of the economic recovery being achieved by the countries of the Black Sea region.

In 2021, unemployment remains an unresolved obstacle for the Georgian economy and society’s most pressing problem. Over the years, diverse public opinion polls have indicated that unemployment is the most important issue at national level. For instance, in 2020, according to a public attitudes poll conducted by the National Democratic Institute, for 46% of respondents, the main challenge they were facing was unemployment.This issue focuses on changes in unemployment trends in Georgia in the period of 2017-2020 and provides an analysis of the effects of the COVID-19 crisis on unemployment in the country.

The wine industry in Georgia has experienced strong growth over the past decade in all key indicators such as exports, turnover, and employment and salaries (measured both in GEL and in USD). The financials of the sector have also looked impressive during this time.

The number of international travelers increased by 294.2% in June 2021 compared to the same period of 2020, and declined by 82.1% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 286.8% (2021/2020) and declined by 79.8% (2021/2019), and the number of international tourists increased by 361.6% (2021/2020) and declined by 71.7% (2021/2019); In June 2021, the number of visitors from Israel, Ukraine and Kazakhstan recovered to approximately 75% of their June 2019 levels; During the period of 2018-2021, average hotel prices in Georgia peaked in 2018, gradually falling in 2019 before plummeting in 2020; Prices of 5-star hotels experienced the highest volatility, while the prices of guesthouses were most stable; In June 2021, the Hotel Price Index increased by 1.5% compared to the corresponding month of 2019, mainly driven by positive expectations about tourism’s recovery, as well as the low base effect due to the shock (Russian flight ban) in June 2019.

In Georgia, the average cost of a room in a 3-star hotel was 136 GEL per night in June 2021, while the average cost of a room in a 4-star hotel in Georgia was 243 GEL per night and the average cost of a room in a guesthouse was 81 GEL per night. The average cost of a room in a 5-star hotel in Georgia in June 2021 was 496 GEL per night. In Guria, the average price was 739 GEL, followed by Tbilisi - 644 GEL, Kakheti - 470 GEL and Adjara – 457 GEL.

The COVID-19 pandemic and the subsequent Great Lockdown have affected investment flows all over the globe, especially in emerging markets. According to UNCTAD, global Foreign Direct Investment (FDI) flows dropped by 35% in 2020, to $1 trillion, from $1.5 trillion in 2019. This is almost 20% below the 2009 levels after the global financial crisis. Moreover, the number of newly announced greenfield projects in developing countries declined by 42% in 2020 compared to 2019. To assess the impact of the crisis on the FDI flows in Ukraine, it is crucial to have a snapshot of the pre-crisis situation along with developments in 2020.

This bulletin focuses on remittance inflows into Georgia in 2020 and its development in 2021. The social and economic stability of Georgia strongly relies on the money sent from emigrants to their families. Based on World Bank Data, in 2019, in terms of dependence on remittance inflows, Georgia ranked 21st in the world, with remittance inflows to GDP ratio. Moreover, the study conducted by the State Commission on Migration Issues revealed that in 2016 money sent by every second emigrant to their families accumulated half or 3/4 of family budget, and for the 15% of families remittance was the only source of income in Georgia. The COVID-19 pandemic and imposed restrictions hindered economic activity in nearly every country, resulting in a negative effect on wages and employment for migrant workers and consequently, drying up of remittance inflows. In 2020 due to the emerged crises and uncertain situation, the World Bank projected shrinking remittance flows for low and middle-income countries by 7.2%3, while the IMF forecasted a 15%4 decline for Georgia. However, despite the crisis and pessimistic predictions in Georgia, the volume of remittance inflows in 2020 compared to 2019 has increased by 8.8% and reached the highest figure in the past decade - 1.9 BLN USD, amounting to 11.9%, expressed as a percentage to GDP.

According to this survey of Georgian economists, the economic climate in the country in the second quarter of 2021 is better than the first quarter of the same year. Georgian economists’ assessment of the current situation has improved, compared to the previous quarter and corresponding quarter of 2020, but nevertheless remained negative. The economists’ predictions for Georgia’s economic situation for the next six months were also negative. Their expectations for this period improved though, compared to their predictions in the first quarter of 2021, and were considerably more optimistic than the forecasts they made at the same time last year.

The number of international travelers increased by 141.6% in April 2021 compared to the same period of 2020, and declined by 86.8% compared to the same period in 2019. Meanwhile, the number of international visitors increased by 140.4% (2021/2020) and declined by 85.0% (2021/2019), and the number of international tourists increased by 182.2% (2021/2020) and declined by 78.2% (2021/2019); The number of visitors to Georgia from Israel in April 2021 recovered to 70% of its April 2019 level, with its share in total visitors amounting to 12.2%; Georgia’s four neighboring countries accounted for 71% of total visitors in 2019. None of these countries had vaccinated more than 20% of their population as of May 23, 2021; Some countries that stand out for their high vaccination rates among Georgia's key source markets include Israel (63% of the population), United Arab Emirates (61%), the United Kingdom (56%), Hungary (52%), the United States (49%), and Finland (41%). Most EU countries have a rate of around 30-40%; In April 2021, the Hotel Price Index decreased by 2.3% compared to the corresponding month of 2019, mainly driven by a price decline of 27.4% in Adjara.

In Georgia, the average cost of a room in a 3-star hotel was 132 GEL per night in May 2021, while the average cost of a room in a 4-star hotel in Georgia was 246 GEL per night and the average cost of a room in a guesthouse was 82 GEL per night. The average cost of a room in a 5-star hotel in Georgia in May 2021 was 402 GEL per night. In Guria, the average price was 600 GEL, followed by Tbilisi - 509 GEL, Kakheti - 432 GEL and Adjara – 391 GEL.