Information about the socio-economic state of the Republic of Abkhazia.
For the period since 2007 till 2009 the profitable part of the budget increased to 8 billion 90,7 million rubles. The sharp increase is related to the inclusion of the gratuitous financial help of the Russian Federation to the profitable part of the budget.
In the law on “state budget of the Republic of Abkhazia for 2013” the financial assistance of Russian Federation of 1 billion 939,5 million rubles is also envisaged in the budget, and own profit is 3 089,9 million rubles, which is formed mostly by means of VAT, income tax and custom duty.
Gross Domestic Product
According to figures of the bureau of state statistic of the Republic of Abkhazia, the growth of the nominal GDP for 2009-2012 was 14,2% at an average, in real terms 12,7% in a year.
Volume and dynamics of GDP (mln rub)
Moreover, despite growth of the nominal GDP high expenses capacity and low efficiency of the use of available resources remains, which, in turn, indicates predominance of the evidence of economy extension.
The sectoral structure of the economy of the Republic of Abkhazia
Among the leading sectors of the economy of the Republic of Abkhazia, the following sectors can be pointed out:
· Communications and so on.
Once highly developed industry of Abkhazia numbering to more than 500 enterprises falled into decay after the war of 1992-1993 and the subsequent 7year blockade (result of economic sanctions of the CIS countries). Main funds, infrastructural objects were destroyed, ransacked or technologically fell behind, which led to considerable flow-out of skilled personnel. All of the above significantly limits the prospects of development of the industry in modern Abkhazia. However, in spite of the above-stated context the industry of Abkhazia is reviving. The main directions of the development of modern industry of Abkhazia are: hydroelectric power, woodworking industry, production of construction materials, food industry, light industry, extractive industry.
The most dynamically developing directions are: food industry, production of construction materials and extractive industry. The basis of modern food industry is export-oriented wine industry.
The food industry also includes the production of honey, bear, adjika, mineral water and lemonade.
In 2012 in the framework of the Complex plan of assistance to socio-economic development of Abkhazia for 2010-2012 Sukhum milk factory was placed in operation, state investments to processing industries.
The increase of construction activities within the framework of assistance of the Russian Federation aimed at capital construction and renovation of objects of social infrastructure has positive effect on the level of internal production of construction materials and led to increase of proportion of extractive industry.
The increase of export of inert activities essential in building sport and infrastructure facilities for Sochi Olympic Games also had positive effect in the volume of output of construction materials and extractive industry.
Power generation is a strategic field of industry. It is necessary to underline that all electric power generated in Abkhazia is generated in the biggest hydroelectric power station in Caucasus on Ingur river. Considering the hydro resources of Abkhazia more than 13,5 million cubic meters of streamflow makes 3,5 million kilowatt annually. The development of hydro-power engineering is both a strategic and highly prospective task.
Trade occupies the first place in terms of GDP (in 2017), it accounts for over 25% of the total value added. In 2017, the total volume of wholesale in the Republic of Abkhazia amounted to 11,784.14 million rubles and retail – 17,109.5 million rubles. The following commodity groups prevail in the trade turnover of the Republic: petrol, construction materials, bread and bakery products, meat and poultry, milk and dairy products, vegetables, wheat flour, confectionery and so on. About 5% of the total number of people employed in different sectors of the economy work in this sector.
The indicators of paid services to the population give a complete picture of the real standard of living of the population and include, in a generalised form, the results of the activities of the following services:
- domestic services;
- housing and communal services;
- passenger transport and communication services;
- services of the education system, culture, physical culture and sports;
- medical services;
- tourist and health-improving services;
- legal services.
The volume of paid services in recent years is growing rapidly over the entire Republic. According to the information of the State Statistics Office, for 12 months of 2017, the volume of paid services to the population, including the estimated sales of services provided by individual entrepreneurs, amounted to 7,077.9 million rubles.
The largest share in the structure of paid services is occupied by communication services and sanatorium and health services.
Construction is one of the most important sectors of the economy that forms the GDP of the Republic. A favourable factor of development of construction is the availability of large and diverse reserves of mineral resources, including marble, dolomite, granite, sand, brick-tiled clay and so on.
Both legal entities and individuals are employed in construction. On the whole, 230 companies are registered in the Uniform State Register of Enterprises and Organisations. This industry employs 1800 people. The majority of enterprises are non-governmental. The companies offer a variety of services, such as object design, construction, reconstruction of different types of buildings, the holding of necessary preparatory works, and finishing and roofing works. The main activity for the majority of construction companies is overhaul. The volume of contract work performed by construction companies of Abkhazia for 2017 amounted to 2,690.6 million rubles.
One of the most dynamically growing and prospective fields of the economy of the Republic of Abkhazia is tourism. In view of a number of national competitive advantages(climate, nature, historical monuments and architecture pieces, etc), the touristic product of Abkhazia holds strong positions on touristic service market, attracting attention to Abkhazia of more than 1 million people annually.
The most eagerly sought field of tourism in Abkhazia is educational tourism which makes up to 60 % of the touristic flow.
Along with educational tourism coastal tourism successfully develops. The majority of tourists that come to Abkhazia to vacate or to be treated stay in Gagra region, because more than 70 % of functional treatment resorts of Abkhazia are situated in Gagra or Pitrsunda.
In spite of relatively positive development dynamics of the tourism in Abkhazia, the potential of the touristic product of the republic is not fully exploited due to several circumstances. Among the competitive advantages that are listed above is the ecological cleanness of the republic.
Traditionally Abkhazia is an agrarian state and according to the figures of the population census, more than 49 % of the population reside in the countryside. On a par the households sector covers up to 50 % of the GPD structure.
Among the main branches of the agricultural development are: fishing industry (anchovy, horse-mackerel) and crop farming (citrus, hazal-nut, grapes). Most of the agricultural products is exported to Russian Federation from Russia.
Taking into consideration the key role that agriculture plays in the economy of Abkhazia, the leadership of the country arranged support of this sphere. Thus, in the frameworks of the complex plan of assistance to socioeconomic development of the Republic of Abkhazia for 2010-2012 year, more than 1000 hectares of perennial crops were planted, and it is planned to plant more than 1000 hectares in 2013. It is planned to build the fruit and vegetables store cellar with the capacity of 2500 tons, the necessary equipment is being bought. The enterprises on the processing of horticultural crops, honey, etc. are projected. These and other measures are aimed at increasing the quality of the output product, diversification of Abkhazian agriculture on competitive markets of other countries, Russia in particular.
Vehicular traffic is the main in the republic. The length of the roads of republic importance is 473,8 km, of local importance - 1830,9 km that lack construction works.
There are two airports in Abkhazia. Sukhum airport is designed for wide-body passenger liners and cargo carriers with the capacity of 200 tons. Bambora airport near Gudauta is designed for reception of civil airliners and all-weather maintenance of naval aviation and transport aviation.
The country prepossesses three seaports, including military Ochamchira seaport.
The length of the railroad is 221 km, the branch from Psou on the border with Russia to Ingur on the border with Georgia located along the seacoast of the Black sea, and also the branch Ochmchira-Tkvarchal.
The official currency of the Republic of Abkhazia is the ruble of Russian Federation (according to art. 140 of the Civil Code of the Republic of Abkhazia). “Ruble of Russian Federation is the legal currency compulsory to reception at nominal cost on the territory of the Republic of Abkhazia”.
Considering the fact that Abkhazia is ön the list of countries that declined national currency the main source of accumulation of money supply is black ink.
However, the underdeveloped state of economy becomes apparent with the negative relation of the aggregate demand to the aggregate supply at the internal market and leads to the annual increase of red ink of the foreign trade turnover, thus limiting the opportunities of monetary and credit policy of Abkhazia, which as a result puts the country in a position of dependence on volume of services export (tourism), of external injections (transfer and other types of payments), international investment.
The National Bank of the Republic of Abkhazia is developing and implementing along with the Cabinet of Ministers of the Republic of Abkhazia the state monetary and credit policy of the Republic of Abkhazia.
The main indices of the Bank of Abkhazia that characterize money-and-credit relations are:
• Prime rate of the Bank of Abkhazia – 12 %;
• Interest rate on refinancing credit of the Bank of Abkhazia (taking into account margin 6 of the annual interest rate) – 18 %;
• Average weighted rate of interest on interbank credits represented in rubles – 22 %;
The Credit system of the Republic of Abkhazia is represented with 11 credit institutions.
Due to absence of wide recognition of sovereignty of the Republic of Abkhazia credit organizations implement foreign economic activities through correspondent accounts in banks of Russian Federation. Correspondingly, the conversion and further transfer into accounts in other countries are implemented through above-mentioned accounts on preliminary notice. This procedure usually takes one bank day.
Abkhazia has the following types of communication:
• Telephone communication (with the access in all regional centers)
- digital telephony
- analogous telephony
• Mobile communication (with the extension to 96 % of the territory of the republic)
- AQUAFON GSM
3) Broad Band WL (in all regions)
International economic activity
External turnover of the Republic from 2008 and till 2013 increased 2,5 times. The positive dynamics is preconditioned on positive changes in the economy of the republic, the increasing paying capacity of the population and the growth of volumes of consumption correspondingly, the growth of touristic flows, the change of volumes and structure of export and the beginning of activities related to the complex plan of assistance to socioeconomic development of the Republic of Abkhazia for 2010-2012 years.