Georgia: The New Nexus of East-West Trade


Due to the global energy crisis and the Russia-Ukraine conflict, the Black Sea trade route between Europe and Asia is more vital, turning Georgia into an international hub for energy, food, and other trade goods.

Due to the global energy supply crisis and the Russo-Ukrainian conflict, the Black Sea trade routes between Europe and Asia through Georgia have become increasingly attractive, turning the country into a transit hub for Eurasian energy, grain, and other international trade. Along Georgia's Black Sea coastline, ports, docks, and container capacities are being renovated or expanded to meet the growing demand for goods transportation in the surrounding area of Georgia.

A series of expansions along the Georgian Black Sea coast have received unprecedented investment support from the government, which aims to make the area a key logistics hub for Eurasian trade. Davitashvili, the Georgian Minister of Economy, stated that expansion and renovation work has been ongoing over the past year, with multiple contacts and communications with port operators, logistics companies, and potential investors.

Free trade agreements (including those with the European Union and China) support Georgia’s role as an important gateway between the East and the West, allowing the country access to a vast market of 2.3 billion people. Over the past two years, Georgia's GDP has seen double-digit growth, with an increase of 10.1% in 2022 and 10.4% in 2021.

The World Bank predicts that Georgia's economic growth will reach 4% in 2023 and 5% in 2024, making it one of the best-performing economies in the Eurasian region. In the first quarter of 2023, Georgia far exceeded these expectations with a growth rate of 7.2%.

Due to the Russo-Ukrainian conflict and economic sanctions affecting the "Northern Corridor" through Russia, the "Middle Corridor" across the Caucasus and the new Silk Road have become the preferred route for shipping companies. Transit through Georgia can shorten the land transportation time from China to Europe to around 15 days and sea transportation to about 45 days.

Apart from the rise in maritime trade, there has been a significant increase in land transport demand in Georgia. Railway freight in Georgia grew by 5% in the first quarter of 2023, reaching 3.2 million tons. The Georgian Railway Company recorded record profits in 2022 and plans to increase its freight capacity from 27 million tons to 48 million tons by 2024.

Meanwhile, Iraqi Garibashvili, the Prime Minister of Iraq, recently announced plans to build a world-class deep-water port in Anaklia, expected to accommodate up to 10,000 twenty-foot equivalent unit (TEU) container ships, with Georgia holding a 51% stake in the project.

In the Black Sea port of Poti, a $250 million expansion project will significantly increase Georgia's cargo throughput to meet the sharply risen demands for goods loading and unloading since the beginning of 2022. The project includes establishing a deep-water port for ships holding up to 9,000 TEUs, processing 150,000 TEUs of bulk cargo, and expanding the breakwater by 1,700 meters and the quay by 400 meters. Upon completion, the project will double the annual container throughput of the Port of Poti to over one million TEUs.

Georgia's second-largest city, Batumi, has also become another critical hub for the international transportation route across the Caspian Sea, with the Batumi International Container Terminal primarily handling railway freight from China and shipping it through the Black Sea to Europe, eventually reaching Constanța in Romania.

Data from the Georgian Statistical Office shows that in the first three months of 2023, Georgian ports received 3,931 ships, with the largest category of general cargo ships growing by 5.4% and container ship numbers increasing by more than 43% compared to the same period last year. As Georgia's value as a freight hub between the East and West becomes more evident, industry insiders expect these numbers to continue to rise.

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The market carries risks, and investment should be cautious. This article does not constitute personal investment advice and has not taken into account individual users' specific investment goals, financial situations, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at one's own responsibility.

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Balance of Trade

The trade balance, also known as the balance of trade, refers to the difference between the total exports and imports of a country or region over a certain period (usually one year). It is a significant indicator used to measure the international trade status of a country or region.

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