Roman Gotsiridze: “Foreign direct investment has decreased by 30% as compared to 2023 and by 40% as compared to 2022.”
Verdict: FactCheck concludes that Roman Gotsiridze’s statement is TRUE.
Foreign direct investment (FDI) totalled USD 1.3 billion in 2024, reflecting a decline of approximately USD 600 million in monetary terms – equivalent to a 30% drop – as compared to 2023. The decrease is even more pronounced when compared to 2022, exceeding USD 900 million (41%), as the volume of investment then surpassed USD 2.2 billion.
Investment from European Union member states fell by 55%, from the Commonwealth of Independent States by 40% and from the United States by 45%. Whilst investment from the United Kingdom increased by 23%, this was an exception against the broader trend of declining investments from most countries. Additionally, investment decreased across most sectors.
In terms of composition, the decline was even more substantial in equity, which reflects new investments. Share capital fell by 60%, from USD 1.2 billion to USD 484 million in 2024 as compared to 2023. Furthermore, the ratio of FDI to the GDP has also declined amidst economic expansion and falling FDI, decreasing from 9% in 2022 to 6.2% in 2023 and further to 3.9% in 2024.
Considering the above, FactCheck concludes that Roman Gotsiridze’s statement is TRUE.
Analysis
Roman Gotsiridze, a member of the 10th Convocation Parliament, shared a video on his social media page featuring his appearance on the TV Formula show Gaighvidze Sakartvelo (Wake up, Georgia), accompanied by the caption: “Foreign direct investment has decreased by 30% as compared to 2023 and by 40% as compared to 2022.”
FDI exceeded USD 2.2 billion in 2022 but declined by 16% to USD 1.9 billion in 2023, followed by a further 30% drop in 2024 to USD 1.3 billion. Most sectors show notable declines as compared to both 2022 and 2023. Furthermore, the share of new investments in total FDI has decreased, along with a significant decline in the investment-to-GDP ratio.
Notably, 12 out of 18 sectors recorded a decline as compared to 2023, 13 as compared to 2022 and nine as compared to both years. Whilst administrative and support services were the only sector to show an increase in both years, their share in total FDI is just 1.3%.
Graph 1: Foreign Direct Investment by Sectors (USD Million)
Source: National Statistics Office of Georgia
Investments from EU countries in Georgia amounted to USD 847 million in 2022, decreasing to USD 684 million in 2023 and further to USD 311 million in 2024. Consequently, investments from the EU in 2024 decreased by 54% as compared to 2023 and by 63% as compared to 2022. This significant decline was primarily driven by two countries: the Netherlands, where investments fell by USD 235 million – from USD 385 million to USD 152 million – and Spain, which recorded an outflow of USD 184 million in 2024 after investing USD 21 million in 2023.
Investments from the CIS countries have declined by 40%, including a 77% drop from Russia. Whilst investments from the UK increased by 23% as compared to 2023, they were still 31% lower than in 2022. Investments from the US have nearly halved, whereas investments from China have fallen from USD 98 million to USD 29 million.
Graph 2: Foreign Direct Investment by Countries or Country Groups (USD Million)
Source: National Statistics Office of Georgia
FDI consists of three components: equity (share capital), reinvestment and debt. Whilst reinvestment – when investors retain profits within the same company – is a positive sign, new investments are even more crucial. Total FDI declined by 30% as compared to 2023 when considering all three components, whilst the equity component alone recorded a sharp 60% drop.
Graph 3: Composition of Foreign Direct Investment
Source: National Statistics Office of Georgia
Another important criterion for assessing FDI is its ratio to the GDP. FDI accounted for 9% of GDP in 2022, decreasing to 6.2% in 2023 and further to 3.9% in 2024. Notably, the FDI-to-GDP ratio in 2024 was the lowest recorded during the 12-year governance of the Georgian Dream party, excluding the pandemic year of 2020.
Graph 4: Foreign Direct Investment
Source: National Statistics Office of Georgia
FactCheck cannot definitively claim what led to the decline in FDI. However, past trends indicate that FDI volumes have often been influenced by the completion of major investment phases in certain projects, such as the Baku-Tbilisi-Ceyhan oil pipeline, the Southern Shah-Deniz gas pipeline and its subsequent expansion and the Baku-Tbilisi-Kars railway.
Whilst investments are also influenced by the political environment, it is challenging to determine the exact extent of this impact. FDI dropped by 70% as compared to the same period the previous year in the first quarter of last year, after Georgia had just received the EU candidate status, when the political environment was relatively stable. This decline cannot be attributed to the base effect, as it marked the smallest investment recorded in the first quarter since 2010, excluding the pandemic period. Subsequently, a 10% increase was recorded in the second quarter, coinciding with the adoption of the so-called Russian-style law and mass street protests. However, there was a significant 55% drop in the third quarter, followed by a 24% rise in the fourth quarter, despite the worsened political environment.
Whatever the reasons, the fact remains that FDI indeed decreased by 30% in 2024 as compared to 2023 and by 41% as compared to 2022. Furthermore, the share of new investments in total investments has decreased even further. The ratio of FDI to the GDP has also fallen from 9% to 3.9% over the past three years. Considering the factual accuracy and the validity of the context, FactCheck concludes that Roman Gotsiridze’s statement is TRUE.
