
Georgia experienced a big decline in foreign direct investment in 2023, according to the state statistics agency. The figures, which Geostat emphasizes are preliminary and subject to revision, suggest the Georgian government should be concerned that increasing political friction with the West may dampen the country’s attractiveness as an investment destination.
Total FDI last year amounted to just under $1.6 billion, marking a 24 percent fall over 2022’s total of $2.09 billion, Geostat reported. Four states – United Kingdom, the Netherlands, Turkey and the United States – accounted for over two-thirds of the FDI that Georgia attracted in 2023. Russia was responsible for the fifth highest FDI figure, with $87.6 million.
The year-on-year dropoff in investment could be a reflection of concern in the West about the Georgian government’s future direction.
The government professes to favor membership in the European Union, and Georgia received a green light from Brussels in December to continue the accession process, but officials in Tbilisi have faced increasing criticism in the West for embracing illiberal practices. The government’s controversial actions in recent years include a failed attempt to adopt legislation to muzzle the non-governmental sector, stronger political ties with Russia, unsubstantiated accusations that a US government agency was funding subversive activity and tepid efforts to promote tolerance. The EU has mandated that the government implement liberal-minded reforms for Georgia to keep its membership bid on track.
Government officials have emphasized recently that the country is not dependent on any one country or region when it comes to FDI. “Despite a lot of speculation, the geography of our investments is quite diverse and it is not connected to one country,” said Economic Minister Levan Davitashvili on December 5. “Up to 50 percent of direct foreign investments… [comes] from EU countries, followed by the United States of America and the Persian Gulf countries.”
Davitashvili’s portrayal was way off. According to the 2023 Geostat figures, European states (taking into account Brexit) accounted for well over half of the FDI figure, while no Gulf State appears in the Top 10 list of FDI sources in 2023.
In addition, the share of new FDI in the overall 2023 figure amounted to just 20 percent of the overall total of $1.594 billion. The bulk of the money tallied as FDI in 2023 was reinvested funds. In 2022, the percentage of fresh FDI relative to the overall amount was 35 percent.
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