The impact of the COVID 19 pandemic on the gross domestic product (GDP) and foreign trade of Georgia (COVID 19 პანდემიის გავლენა საქართველოს მთლიან სამამულო პროდუქტზე და საგარეო ვაჭრობაზე)

Abstract

The paper discusses the impact of the COVID-19 pandemic on the economy of Georgia - in particular, on the country's GDP and foreign trade; the processes that took place during this period, and their impact on gross national product (GNP). The focus is made on the early stage of COVID-19 impact as the pandemic is still in progress and its results might be different in medium and long term. More than 5.7 million people have died worldwide due to COVID-19 since the beginning of the pandemic that is much more than the total population of Finland, Norway, Denmark or Georgia. The COVID-19 pandemic is a serious threat both to healthcare worldwide and the global economy. The mankind has faced the greatest challenge. New challenges require the development of a new problem-solving mechanism and a new agenda. The COVID-19 pandemic has turned out to be an unexpected challenge to all the economies round the world, including Georgia. The scale of this challenge has been quite large in the recent period. It is worth noting that in 2019 Georgia's GDP amounted to USD 17.5 billion in current prices, while in 2020 – USD 15.8 billion. Clearly such a change is the result of a change in the GEL exchange rate. In 2020, the country's GDP in US dollars decreased by USD 1.7 billion (9.7%). In 2019, the country's GDP at constant prices amounted to GEL 40.3 billion. It should be noted that in 2020, the real GDP of the country amounted to GEL 37.6 billion compared to the nominal GDP. Therefore, the economic recession has become clear - during the COVID-19 pandemic, in 2020 alone the real GDP decreased by GEL 2.7 billion (6.7%) compared to the previous year. If in 2019 the GDP per capita was USD 4696, in 2020 it reduced to USD 4 256. This means that GDP per capita in 2020 decreased by USD 440 (9.4%) compared to the previous year. Economic (and not only) restrictions imposed during the Covid 19 pandemic, suspension of tourism activities, reduction of investments, exports and imports have led to changes in the national currency exchange rate. The COVID-19 pandemic has significantly affected the globalization of the world economy. GDP, GDP per capita and other economic indicators have decreased all around the world. Poverty has increased worldwide, while the globalization of the economy on the contrary reduces poverty. This pandemic should become a good lesson for the international community so that in case of similar pandemics in the future (hopefully such a large-scale pandemic will be the last one) the international community will be better prepared to meet it. Thus the COVID-19 pandemic has created serious challenges that we least expected. Nearly two years have passed and the covid-19 viruses are still spreading around the world. I greatly hope that everything will end soon and that the economy of Georgia as well as the global economy will continue to develop without the COVID-19 pandemic. Any pandemic will start and end, but the international community will need to be more prepared with recent knowledge and experience.