COVID-19 in Georgia – what will be next?

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Фото eurasianet.org

The Ministry of Foreign Affairs and State Commission on Healthcare Issues of the PRC held a video conference with experts working in the health care field from Georgia, Azerbaijan, Belorussia, Moldova, Armenia, Turkmenistan and Committee of SCO.

Specialists of the Chinese Center of Control and Prevention of Diseases and of the Clinic #1 subordinated to the Beijing University shared the Chinese experience in prevention, control and treatment of COVID-19 with participants of the conference.

Participants of the conference exchanged their opinions concerning the issues of prevention and control, diagnostics, screening and lab analyses, reached an agreement on enhancing of information sharing and closer coordination of cooperative actions.

The video conference was attended by Director of the Center of Prevention and Control of Diseases of PRC, Academic Gao Fu, a chief epidemiologist U Dzun Yui, a chief physician of the Beijing University Hospital and a head of the Department of Infectious Diseases Wang Guztsan.

According to the head of the National Center of Control of Diseases and Public Social Care of Georgia Amiran Gamkrelidze, this conference was held in a very favorable time. Georgian side has thoroughly reviewed knowledge, practice and experience of prevention and control, submitted by the Chinese experts and will continue to study and apply them in future. Gamkhrelidze said that China has established a world model of struggling with a new epidemics of the coronary pneumonia that is worth of respect and recognition. Georgia is ready to support close exchanges and cooperation with China in resolving of the problem of epidemics of pneumonia.

Sometimes earlier China and the EU also held two video conferences devoted to the issues of prevention and control over the COVID-19.

In its turn, the Minister of Health Care, Labor and Social Protection of Georgia Ekaterine Tikaradze met the Ambassador of the PRC Li Yan to discuss the issues connected with prevention of the coronavirus.

According to the Xinkhua Agency, the official representative of the Ministry of Foreign Affairs of China Chjao Litszyan, on the 4th of March, criticized the media outlets which named the new coronavirus as a “Chinese virus”. According to him, this formulation is “extremely irresponsible”. He noted that the COVID-19 represents a global challenge which requires agreed efforts of the international community to repress the epidemics.

Chjao Lindzyan noted that the WHO indicated on necessity of using of the term “COVID-19” as a name of a new infection but not linking it with a geographic place to prevent using of other labels and names.

Spreading of the virus is a global problem, a work on tracing of the source of the coronavirus is still pending, but there are no conclusions made yet,” – said Litzyan.

Deputy Minister of Health Care of Georgia Tamar Gabunia considers the country actively uses experience of China in the war with coronavirus.

We use experience of China which could localize the epidemics and we are sure that we will prevent disease in our country. We have already implemented exit-screening which firstly was tested in China and is implemented on the points of entrance and exits of people. Situation with the virus causes panics and worry among population and we got a very unpleasant experience as people arrived from China and Asian countries actually had been persecuted. We regret that we couldn’t prevent such cases where relevant. We will make all efforts to guarantee adequate safety of all people being conductors of a high risk to provide safety of medical organization and to mobilize special police crews.”

In sum, a number of infected patients in Georgia amounts to 12 (as of the 7h of March), 162 people are passing the quarantine, and 45 patients are being observed by physicians in hospitals. Among the newly-infected patients is a son of Amiran Gamkhrelidze, Nikoloz Gamkhrelidze being a Director of the largest Georgian medical company “Evex”.

The Government of Georgia created a special web-site: www.stopcov.ge to inform society about the coronavirus where information on all actions implemented by the Government, as well as recommendations of the WHO and Ministry of Health Care of Georgia will be published.

Besides, in connection with the coronavirus an interdepartmental coordination council chaired by the Prime-Minister Giorgi Gakharia was established in Georgia. According to the Decree of the Government issued on the 2nd of March the plan of action for prevention of possible spreading of coronavirus and the plan of operative responding on new cases of disease had been amended.

Amendments consider accompanying of cargo vehicles with their crews moving via the territory of Georgia from the countries of a high risk up to a relevant point of crossing of borders. In addition to it, drivers of vehicles from the zones of high risk will be replaced by other physical bodies which are not included into the risk group. An authorized officer of the custom authority will conduct a complete disinfection of the vehicle, and a driver of the cargo vehicle (a citizen of the foreign country) driving the vehicle while crossing of the border will be returned back, or, proceeding from the clinical state, will pass the quarantine/ placed in the medical clinic. Besides, a studying process was suspended in all state and private educational institutes of Georgia.

The bodies being in the quarantine or self-isolation will receive the whole compensation for the missed working days. Relevant changes are entered into the Decree of the Minister of Health connected with preventive measures of spreading of the coronavirus.

Epidemics of the coronavirus has already made a negative impact on the world economics. In our country, first of all, the first effect was felt by the field of tourism which, according to the estimations, has also lost more than 10 mln. US dollars. Georgia temporarily suspended flights with Iran and China. Recently, the Hungarian low-coster WizzAir decreased a number of flights from the Kutaisi Airport in some Italian cities. And, based on the Decree of the Government of Georgia, all direct flights between Italy and Georgia have been limited since the 6th of March.

A Chairman of the Federation of Hotels, Restaurants and Cafes of Georgia Shalva Alaverdashvili says: “We have received the first strike, for the last 5-6 days 80-90% of bookings were cancelled for March-April. It means that the field is on the edge of bankruptcy. Coronavirus is a global problem, nobody is faulty, we are not going to blame anybody. We only need to resolve this situation. The largest damage is incurred to Tbilisi, as the season has not started in other regions of Georgia yet”.

The Federation addressed to the Minister of Economics of Georgia Natia Turnava asking to postpone paying of the property tax, income tax and other pension contributions due to the financial problems caused by the virus. Besides, the Federation addressed to the Government for mediation in negotiations with the bank sector for postponing of bank obligations for a definite period.

The Georgian Consulting Company “Galt&Taggart” published its analysis on impact of the coronavirus on the Georgian economics:

«We hope that the coronavirus will be a short-term problem, but if the virus continues to spread globally, there will be some challenges:

A negative impact on tourism is expected regardless of how long the virus spreads. Georgia temporarily suspended direct flights to China and Iran. The share of these countries in the total visitors and tourism revenues is small, and revenues will be reduced before resuming flights. However, due to the panic caused by virus, visitors from other countries are also likely to refrain from traveling, and consequently tourism losses will increase. However, making predictions on tourism revenue shortfall in advance is difficult.

Georgia introduced temporary direct flight ban from China on coronavirus fears. We estimate monthly tourism revenue loss and arrival loss at c. US$ 2.5mn and c. 4,000 arrivals, respectively, from China due to flight ban, which expires in April 2020. In 2019, Georgia received c. US$ 300mn in revenue from China, accounting for 1.7% of GDP and only 3% of total foreign source revenues (with copper re-export excluding only 0.8% of GDP). In the last five years, foreign revenue from China increased by only US$ 100mn, mainly related to increased copper re-exports.

Georgia introduced temporary travel ban from Iran on coronavirus fears. We estimate monthly tourism revenue loss and arrival loss at c. US$ 8mn and c. 11,000 arrivals, respectively, from Iran due to travel restrictions, which currently is introduced for two weeks. In 2019, Georgia received a total of US$ 177mn in revenue from Iran, accounting for 1.0% of GDP and only 1.8% of total foreign source revenue. In the last five years, inflows from Iran have increased by US$ 127mn, mainly related to the tourism sector.

The expected reduction in tourism will negatively affect the real estate sector, as sales may slow down, including from foreigners. Consequently, housing construction will likely slow, but the continuation of public infrastructure projects will somewhat contain slowdown of the construction sector.

As a result of the spread of the virus, world oil prices are falling, benefiting oil-importer Georgia. However, a significant drop in oil prices also has a negative effect, as cash inflows from oil-exporters Russia and Azerbaijan will decrease. Consequently, the overall impact may be negative (as it was in 2015-16).

The expected decline in tourism revenues will have a negative impact on the lari, although we believe that the National Bank has instruments (reserves, the policy rate, etc.) to curb the excessive depreciation.

If coronavirus persists, world commodity prices will continue declining, which will contain a sharp increase in prices in Georgia along with weak domestic demand, in our view. In the event of a sharp decline in tourism revenues, the government and the National Bank have the appropriate policy tools to maintain economic growth at 3%, we believe. The government has enough fiscal space – public debt and budget deficit are low, and already incorporates a buffer of GEL 700mn from domestic debt issuance. This money is accumulated on government deposit under 2020 budget and can be used, if necessary, to stimulate the economy.

To take the current situation into consideration we determined possible threats for the Georgian economics and allow developing of an unfavorable scenario.

We hope that the virus will not receive a form of global pandemics and economics will restore. But, currently, there is an indefinite expectation in the world and is very difficult to make any assessment.

We have many successful examples of struggling with global and regional shocks. For example, a Russia’s ban on direct flights last year, the Georgian economics demonstrated fast rates of grow since 2012, that amounted to 5,2%.

By the end of 2019 forecast of the economic growth in Georgia for 2020 was renovated and reached 4,7%. Besides, two key risk factors were determined – making strict monetary-credit politics and uncertainty connected with elections. But there appeared a new risk factor – the coronavirus which actually covered the latter two. Recently, it is difficult to make an exact assessment of the impact of this virus on the economics.

Due to spreading of the virus, flights from China and Iran are suspended that decreased incomes of the Georgian economics.

A share of profit being received by a touristic sector from these countries is not large. But, according to our estimations, prior to -relaunching of flights (probably in April 2020) monthly losses will amount to about 2,5 mln. US dollars and 4000 visitors from China. In 2019 Georgia received an income in the amount of 300 mln. US dollars from China that is 1,7% of GDP and 3% of incomes were received from external sources.

Monthly losses, prior to re-launching of traffic in Iran, will reach about 8 mln. US dollars and 11000 visitors. In 2019, Georgia received an income in the amount of 177 mln. US dollars from Iran that is 1,0% of GDP and 1,8% from external incomes.

But due to the panics caused by the virus, visitors from other countries will not travel and losses in the field of tourism will increase. But if the virus causes weakening of the world economics, this process, certainly, will have a negative impact on our economics. We hope that epidemics of the coronavirus will be short-termed.

In connection with epidemics world prices on oil are falling that is favorable for Georgia, being a country-importer. But, a significant decreasing of prices on oil will have a negative effect as it decreases cash flows from Russia and Azerbaijan.

Expected decreasing of incomes from tourism will have a negative impact on exchange rate of national currency – lari. However, we consider that the National Bank of Georgia has good levers (reserves, discount rate and others) to prevent excessive devaluation of lari.

Generally, we consider that in case of abrupt decreasing of incomes from tourism the Government of Georgia and National Bank have levers to support economic growth on the level of 3%.

State debt and deficiency of budget are very low and, according to these parameters, we have a buffer in the amount of 700 mln US dollars. This monetary funds can be applied by the government in case of necessity to stimulate the economics”.

Only last year, after enacting of the Agreement on Free Trade between Tbilisi and Beijing, a volume of bilateral trade exceeded 1 billion US dollars. Today, more than 20 Chinese companies invest in Georgia, actively cooperate with the Georgian party in the field of construction, agriculture, finance, communication and economic zone and support the development of Chinese-Georgian relations. Good prospects are in the cultural collaboration as well.

Simultaneously, it is necessary to note that Georgia and China concluded a treaty on free trade and Georgia became a member of the global initiative of China “One belt – one way”. A volume of trade between our countries exceeded 1 billion US dollars, and for the last year a number of Chinese tourists visiting Georgia increased by 50%. Today, more than 20 Chinese companies invest in Georgia, actively cooperate with Georgian side in the field of construction, agriculture, finances, communications and others.

Lika Zhorzholiani