Russian Exports To Georgia Up 74% In 10M 2022

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Georgia has been increasing Russian imports to record highs this year, while Western economies have been existing the market. Economists believe Georgian buyers are taking advantage of weak demand for Russian commodities and snapping up bargains.

According to the latest data from Georgia’s National Statistics Office, Georgian imports from Russia grew 74% in the first ten months of 2022, continuing a decade-long trend.

Purchases of oil, refined oil products, flour, and coking coal – Georgia’s main imports from Russia – have all jumped. The import of oil and petroleum products has increased by 179% this year.

However, concerns from EU supported think-tanks state concerns that Georgia is growing too dependent on its former USSR partner. “Abusing energy dependence has been a common practice for Russia, which makes the issue more severe. Russia is actively utilizing energy resources, especially gas, to advance its own political agenda in the international arena,” said the Institute for the Development of Freedom of Information in a November 28 report.

The IDFI points out that Russia has become Georgia’s number one import partner in terms of oil and refined oil products, whereas last year about half of gasoline and diesel imports were sourced from the European Union. If in 2021, 15& of Georgia’s petrol came from Russia; in the first half of this year the figure hit 39% and while 24% of diesel was Russia-sourced in 2021; it increased to 34% in 2022.

Trading companies have stated when questioned about their turn to Russian suppliers that suggest that low prices are the reason for this. There are examples. Soso Pkhakadze, chairman of Wissol Group (a major player in the oil import market) said in July that Wissol was seeking cheaper alternatives amid oil price volatility resulting from Russia’s conflict with Ukraine. “We are businessmen and open to negotiations with any country. We will import oil from a country where it is cheaper,” said Pkhakadze.

Georgian exports to Russia have also grown this year, by 10% in the ten months January to October 2022.

Nika Kapanadze, an economist from Policy and Management Consulting Group (PMCG), in Tbilisi, has stated that “Oil is a global commodity and if Russia doesn’t give it to us, it won’t be a problem and we will find another market easily.” Wheat is more complicated, Kapanadze adds, noting that 90% of wheat flour consumed in Georgia is imported from Russia. He suggests that Georgia must intensify dialogue with other producers, such as Kazakhstan and Turkey, to ensure food security. Georgia has a Trade Agreement with Kazakhstan via the CIS and also with Turkey.

“Importing from Russia is easy and cheap,” he said. “Economic dependence on Russia is a tradition stemming from Soviet times. The Georgian businessman knows the Russian language. It’s easy to import products from there. Additionally, it’s close and logistics isn’t complicated.”

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