Economic Outlook and Indicators

www.pmcg-i.com Construction Sector- 2013

Issue #22

M02.04.2014

In 2013, the volume of construction decreased (-10.5%; -124.3 mln.GEL) compared to 2012. Therefore, the number of empolyees in construction sector also decreased (-18.8%; -10,984 man). In 2013, expenses on construction from the consolidated budget was less (-19.2%; -368.2 mln.GEL) than the corresponding indicator in 2012. In 2013, the volume of Foreign Direct Investments (FDI) in construction increased (29.1%; 20.1 mln.GEL), this is likely to affect the volume of construction 2014. In 2013, the balance of the volume of the loans to construction stayed almost the same. In addition, the share of the loans to construction in total loans reduced (1.1 percentage point) and is 8.1%. In January and February 2014, the indicator of transactions of primary registrations of the real estate exceeds (15.9%; 1806) the indicators of corresponding period in 2013.
The volume of construction and its growth rate compared to the previous year indicator
400 35% 30% 25% 300 20% 15% 10% 200 5% 150 0% -5% -10% 50 -15% -20%
growth rate (compared to the previuos year)

350

250
mln.GEL

100

the increased expenses (54%; 208.0 mln.GEL) on infrastructure from the consolidated budget in this period, but

In all quarters of 2013, the volume of construction is lower compared to the indicators of corresponding period in 2012. The reduction was highest in the third quarter (-16.9%; -62.2 mln.GEL). In the fourth quarter of 2013, the situation recovered slightly compared to the other quarters. This was due to the volume of construction was still less (-3.2%; -7.7 mln. GEL) than the indicator of the corresponding period in 2012.

In 2013, the volume of construction decreased (-10.5%; -124.3 mln.GEL) compared to 2012.

2011 I

II

III

IV

2012 I

II

III

IV

2013 I

II

III

IV

Construction (left axis)

Growth rate (compared to the previous year)(right axis)

The number of employees in construction decreased (-18.8%; -10,984 man), due to the reduction of this sector
(-10.5%). In 2013 , the number of individuals employed in construction sector is 47,459 man. In 2013, average monthly remuneration increased slightly (1.1%; 11.7 GEL) compared to the corresponding indicator in 2012 and is 1034.2 GEL.
thousand people

Number of empolyees in construction and their average monthly remuneration

80 1400

70

1200

60

1000

50 800 40 600 30 400

It is interesting why the avaerge salary increased, while the employment in construction and productivity of employees (-8.4%) in this sector decrease.
Foreign Direct Investments (FDI) and the volume of construction
2000 1800

20

10

200

2007

2008

2009

2010

2011

2012 I

II

III

IV

2013 I

II

III

IV

Number of employees (left axis)

Average monthly remuneration (right axis)

350

300 1600 1400

construction, mln.GEL

1200 1000 800 600 400

200

FDI in construction (mln.GEL)

250

150

100

50 200 0 2008 2009 Construction (left axis) 2010 2011 2012 FDI in construction (right axis) 2013 0

In 2012, Foreign Direct Investments (FDI) in construction decreased (-14.8%; -12.0 mln.GEL), which more likely has affected the reduction of the volume of construction in 2013 (-10.5%; -124.3 mln.GEL).

Due to the specification of construction sector and the fact that FDI in construction mostly inflows in the second part of the year, it could be assumed that the volume of FDI in 2012 affects the volume of construction in 2013. The graph shows FDI in construction with 1 year lag.

GEL

Economic Outlook and Indicators

www.pmcg-i.com Construction Sector- 2013
Issue # 22

M02.04.2014

The volume of loans in construction and its growth rate compared to the previous year
600 100%

In 2014 the situation recovered slightly and in February the balance of the volume of the loans in construction increased (2.1%; 8.6 mln.GEL) compared to February 2013. Since the third quarter 2013, the volume of loans on construction was decreasing,but the indicator of January and February 2014 increased (3%; 2.1%).

60% 400
mln.GEL

40% 300 20% 200 0% 100

-20%

0
2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jan 2014 Jan Jul Jul Jul Jul Jul Jul Oct Oct Oct Oct Oct Oct Jul Apr Apr Apr Apr Apr Apr Apr Oct

-40%

Loans for construction (left axis)

Growth rate (compared to the previuos year)

Infrastructural expenses from the consolidated budget and its growth rate compared ro the previous year
2500 80%

2000

40%
mln.GEL

1500 20% 1000 0% 500

growth rate (compared to the previous year))

60%

In 2013, the volume of expenses on construction from the consolidated budget decreased (-19.2%; -368.2 mln. GEL) and is 1,548 mln.GEL. This can be due to unused

recourses by the sectoral ministries. In the mentioned period, the completion rate of the expenses on infrastructure was only 86.3%. It should be noted, that the infrastructural expenses from the budget have never reduced since 2009.
In 2014, the infrastructural expenses is planned to increase (7.2%; 112.0 mln.GEL). In January and February 2014, the infrastructural expenses is 39.0 mln.GEL, which is higher (8.3%; 3.0 mln.GEL) than the corresponding indicator in 2012.

-20%

0 2007 2008 2009 2010 2011 2012 2013 2014* Instrastructural expenses from the consolidated budget (left axis) Growth rate (compared to previous year)(right axis)

-40%

Basic Economic Indicators

Nominal GDP in current prices (mln USD)
Per capita GDP (USD) GDP real growth, percent Consumer Price Index (annual average) Foreign Direct Investment (USD) Unemployment Rate External Public Debt (mln USD) Poverty Level (registered)

III12
4129 918 7.50% 199 -

IV12
4332.2 963.2 3,0% 233.7

2012
15 846.8 3 523.4 6.2% 99.1 911.6 15% 4739 9.7%

I 13*
3487.6 777.8 2.4% 226.2

II 13*
3958.4 882.8 1.5% 232.4

III 13*
4120.3 918.9 1.4% 238.7

IV 13*
4552.9 1015.4 7.1% 217.1

2013
16126.4 3596.6 3.2% 99.5 914.4 4202

Contact Information

PMCG Research

Tamar Jugheli

E-mail: research@pmcg.ge

E-mail: t.jugheli@pmcg.ge T: (+995) 2 921171 www.pmcg-i.com

Source:

National Statistics Office of Georgia, Ministry of Finance of Georgia, National Bank of Georgia

*projected

-2-

growth rate (compared to the previuos year)

In 2013, the balance of the volume of the loans in construction stayed almost the same.

500

80%