Badri Japaridze, TBC Bank, on the Georgian Economy Today

TBC Bank, featured on the London Stock Exchange (LSE), is in an ideal position to promote Georgia as a prime destination for investment. Speaking at the Bristol Business Conference in Tbilisi on Friday, the Deputy Chairman of TBC Bank, Badri Japaridze, explained how.

“Georgia is uniquely positioned in a region known for turbulence, offering a stable and predictable economy and politics,” he said. “The economy has been growing fast in the last 10 years. When the world saw a financial shake up that affected our neighbors, Georgia saw a 2.4% increase in GDP. This year’s forecast is 5.6%. Negative developments in the region, such as that happening in Turkey, lead investors to be concerned about the potential impact on Georgia, but we explain to them that thanks to Georgia’s economic diversity, any impact felt will be minimal. The Turkish situation only hit Georgia with a 0.5 % impact, leaving a strong 5.6% GDP forecast due to that very diversity.”

He went on to invite guests at the conference to compare the Lari performance to the currencies of neighboring countries, citing it as the most stable in the emerging markets economies.

“The Lari is free-floating, absorbing regional shocks and enabling Georgian producers to keep their products competitive,” he said. “The Lari reacts in a prudent way, and while it depreciated at the beginning of the year, fluctuation since has been minimum. I would personally say the Lari is undervalued.”

Trade & Services

As a result of the AA and DFCTA, last year Georgia-EU trade increased to make up a larger total percentage of export and trade as compared to 12 years ago when Georgia was more exposed to the neighboring market. Tax rate as a percent of commercial profit is just 16.4% in Georgia, putting it way below the majority of European countries (as an example, Estonia is 48.7%, Lithuania 42.7%, Turkey 41.1%, Ukraine 37.5%, Bulgaria 27.1%, and the UK has 30.7%).

“Among the main drivers of the Georgian economy is tourism and hospitality. By September this year, we had welcomed 40% more British holidaymakers, the same amount as in the entire year of 2017,” Japaridze noted.

Tourists are also up from Russia, Israel and Turkey in 2018. After the nearly 8 million visitors who enjoyed Georgia last year, the government is targeting 10 mln by 2020, an impressive number for a country that sports just a 4 mln population.

“The difference between us and our neighboring countries is that we’re not dependent on oil prices,” he went on to note. “When they are low, we benefit as importers. When they are high, we still benefit because that means our neighboring countries are doing well and have more to spend on their visits to us.”

Transport and Logistics

“The under-construction Anaklia Deep Sea Port will give Georgia the chance to increase flow of goods from the EU to Asia and vice versa. We are definitely a hub for financial services. We have two banks on the London Stock Exchange, which speaks of the high level of transparency and governance, setting us as an example and benchmark in the region,” he said.

Japaridze then went on to compare Georgia to Singapore, where growth is also driven by FDI. “It’s a good example for us as it also plays a role as a hub in financial services,” he said.

Opportunities in Education & Healthcare

The TBC Deputy Chairman spoke briefly on two sectors in Georgia that are particularly ripe for investment: the education system and healthcare, clearly hoping to tempt the British businessmen present to look into them further.

“Georgia is historically known for its high level of education,” he said. “And today we’re seeing a growing number of foreign students coming from the Far East, India, and Africa. It’s also an attractive area for investment, which would help us to enhance our role as an educational hub in the region.”

“We have one pharmaceutical company on the LSE, clearly speaking for the strengths and qualities of that company. Pharmaceuticals is an area with a big role to play and makes for a good area to invest in. Georgia has a track record and special relationship with post-Soviet tourists interested in its health resorts, and so it boasts interesting opportunities for medical tourism development.”

Looking ahead

Reforms implemented in the country are helping to facilitate and encourage reinvestment. TBC Bank claims to be a good benchmark in the region for its strength and resilience.

“In 2008-09, Georgia experienced war, global financial meltdown and local instability. There was no bail-out for the Georgian banks, and yet we went on to enjoy strong growth. In the last five years we have seen responsible growth, not inflated or without fundamentals, demonstrating to investors, in the four years of TBC Bank’s being in the LSE, that we have delivered on all our promises and will continue to do so.”

By Katie Ruth Davies