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Economic and political overview

Economic Overview

Georgia is a transition economy influenced by its past affiliation to the Soviet Union. Economic growth in recent years has been boosted by rising domestic and external demand, resulting in higher consumption, exports, tourism, and remittances. After contracting following the COVID-19 pandemic, the country’s GDP rebounded strongly, growing 10.1% in 2022 and an estimated 7% in 2023 (data GeoStat), supported by increased tourism, transit trade, and financial inflows linked to Russia’s war in Ukraine, as well as swift policy responses. According to the IMF, growth is expected to ease to 5.7% in 2024, with consumption playing a larger role supported by strong real wage growth and employment. In the medium term, growth is expected to converge to its potential rate of around 5%.

In 2023, the current account deficit remained at a historic low of 4.5% of GDP. Lower remittances from Russia were offset by an improved goods trade deficit, aided by lower import prices. Gross international reserves at the end of 2023 were USD 5 billion, covering slightly over 3 months of imports. However, the deficit is projected to widen in 2024 to 6% of GDP as remittances normalize and imports increase. Over the medium term, it is expected to converge to 5.5% of GDP as the services trade balance improves. The fiscal deficit in 2023, including budget lending, was 2.4% of GDP, surpassing the budgeted deficit of 2.8%, mainly due to higher revenues. The 2024 budget aims for a deficit of 2.5% of GDP, with increased revenues from corporate income tax for banks and new gambling taxes funding higher expenditures. These include increased wages, social benefits, and capital investments. Public debt is projected to remain below 40% of GDP both in 2024 and over the medium term. Inflation experienced a significant decline throughout 2023, ending the year at 0.4 percent. This drop was facilitated by a robust lari, reduced commodity prices, and a firm monetary policy approach. In response, the National Bank of Georgia (NBG) has gradually reduced its policy rate by a total of 275 basis points since May 2023, reaching 8.25 percent by March. However, inflation is projected to rise to 4 percent by the close of 2024, as the positive impact of last year's external factors diminishes and the tightness of monetary policy is relaxed. Over the medium term, inflation is anticipated to revert to its target level.

The Georgian unemployment rate is still high: it was estimated at 18.4% in 2023 and is expected to reach 18.6% by 2024, also due to the increased number of immigrants joining the labor market, before easing in 2025. According to the latest figures from GeoStat, 15.6% of the population was living below the absolute poverty line in 2022: Inequalities remain high compared to other economies in the region, with low levels of education and a rural population (40% of the total – World Bank). Overall, the average GDP per capita (PPP) was estimated at USD 20,172 in 2022 by the World Bank.

 
Main Indicators 2023 (E)2024 (E)2025 (E)2026 (E)2027 (E)
GDP (billions USD) 30.5433.1935.9138.6041.50
GDP (Constant Prices, Annual % Change) 7.57.66.05.05.0
GDP per Capita (USD) 8,1738,8839,61310,34211,129
General Government Balance (in % of GDP) 0.30.20.80.81.0
General Government Gross Debt (in % of GDP) 39.238.237.437.236.4
Inflation Rate (%) 2.51.12.63.03.0
Unemployment Rate (% of the Labour Force) 16.414.514.514.514.5
Current Account (billions USD) -1.33-1.93-2.11-2.23-2.40
Current Account (in % of GDP) -4.3-5.8-5.9-5.8-5.8

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

See the country risk analysis provided by La Coface.

 

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Main Sectors of Industry

More than 1.83 million Georgians, out of a population of 3.7 million, constitute the domestic labour force (World Bank) and the country possesses many natural resources on its territory. The country has forests and woods, rivers and lakes, farmland, marble, minerals, manganese, iron, copper, coal, oil, clays, and sand, as well as wildlife. Georgia has an agricultural tradition, which has helped develop its economy for years. However, the agricultural sector has been in decline since 1995: agriculture now accounts for 6% of the GDP and employs 40% of the working population (World Bank, latest data available). Around 98% of farmers are self-employed, and production is largely for self-consumption. More than 40% of Georgian territory is considered agricultural land, which also includes pastures and grasslands. The main agricultural products are cereals, technical plants, subtropical plants, fruit varieties, melons and gourds, tobacco and wine grapes, as well as rice, tea and cereals, tea and livestock. Georgia is also one of the oldest regions of wine producers and is rich in drinking water resources. The country has signed a Deep and Comprehensive Free Trade Area (CFTA) agreement with the EU, which implies that all Georgian agricultural products can be exported without duty to EU markets. According to the latest available figures by the National Statistics Office, the average annual income stands at GEL 1,508 for small holdings and GEL 13,151 for medium and large holdings.

Following a decline during the break-up of the Soviet bloc, and again between 2004 and 2008, the industrial sector in Georgia has seen signs of recovery. The industry contributes 21.4% of the GDP and employs 14% of the working population, while the manufacturing sector accounts for 10% of the GDP (World Bank). The industrial sector includes mainly food processing and the manufacture of transportation equipment, electric motors, iron, steel, aircraft, chemicals and textiles. Mineral extraction concerns manganese (mainly in the Chiatura and Imeritia regions), copper, tungsten, marble and oil. Although Georgia has significant hydroelectric power generation capacity, it is heavily reliant on oil and gas imports. According to GeoStat, the total industry turnover stood at GEL 24.5 billion in 2023, 6.5% less than one year earlier.

Services is the most dynamic subsector of the economy, accounting for 59.6% of Georgia's GDP and employing around 46% of the workforce (World Bank). The sector is boosted by the hotel, restaurant, transport and telecommunications industries. The tourism sector grew rapidly until COVID-19 (9.4 million visitors in 2019 according to Georgian National Tourism Administration), and has become one of the government's priorities with the development of coastal infrastructures in the Adjara region and Svaneti ski resorts. In 2023, the influx of international non-resident travelers to Georgia reached 7.1 million, marking a 30.3% increase compared to the preceding year's figures, but still below the pre-pandemic level. As of September 30, 2023, there were 15 commercial banks in operation in Georgia, with total assets worth GEL 65.58 billion.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 39.9 13.6 46.5
Value Added (in % of GDP) 6.0 18.9 62.1
Value Added (Annual % Change) -3.4 5.1 10.9

Source: World Bank - Latest available data.

 
Monetary Indicators 20162017201820192020
Georgian Lari (GEL) - Average Annual Exchange Rate For 1 USD 2.372.512.532.803.11

Source: World Bank - Latest available data.

 

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Foreign Trade

Georgia is very open to international trade as it accounts for around 116% of its GDP (World Bank – latest data available). The country has no foreign exchange controls, allows foreign investment in almost all sectors, and has an impressive privatization program, particularly in terms of land allocation. The main products exported in 2023 were motor cars (34.9%), copper ores and concentrates (7.9%), wine of fresh grapes (4.3%), alcoholic beverages (3.2%), and ferro-alloys (3%); whereas the main imports were motor cars (21.1%), petroleum and petroleum oils (7.5%), medicaments put up in measured doses (3.5%), petroleum gases and other gaseous hydrocarbons (2.9%), telephone sets (2.4%), and copper ores and concentrates (1.5%).

In 2023, Georgia's main customers were Azerbaijan (14.2%), Armenia (12.9%), Kazakhstan (11.5%), Kyrgyzstan (11.4%), Russia (10.8%), with the CIS countries accounting for 65.9% of total exports and the EU for 11.6%. Georgia’s main suppliers were Türkiye (16.5%), the United States (13.0%), Russia (11.2%), China (8.5%), Germany (6.3%), Azerbaijan (4.2%). The EU accounted for 24.6% of total imports, the CIS state for 21.2% (data Statistics Georgia). The country was the second former member of the Soviet Union to join the WTO and free trade agreements with Europe and China help attract foreign investors. In 2014, Georgia signed an Association Agreement (AA) and a Comprehensive Free Trade Agreement (ALECA) with the European Union, which has strengthened its exports. The Georgian government is seeking to improve its ports on the Black Sea to boost East-West trade.

Georgia has a structural trade deficit due to the low diversity and value of exports. According to WTO, in 2022, merchandise exports amounted to USD 5.5 billion (+31.5% y-o-y), whereas imports reached USD 13.5 billion (+34.1% y-o-y). At the same time, exports of commercial services more than doubled to USD 5.6 billion, while imports of services amounted to USD 2.9 billion (+63.1%). For the year as a whole, the World Bank estimated the country’s trade deficit at 9.8% of its GDP. Preliminary figures from Statistics Georgia show that in 2023, the country’s exports reached almost USD 6.09 billion, 9.1% higher vis-à-vis 2022; whereas imports reached USD 15.4 billion (+14%).

 
Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 9,5188,04910,09913,54815,514
Exports of Goods (million USD) 3,7983,3414,2435,5836,091
Imports of Services (million USD) 2,4251,4561,8223,0293,833
Exports of Services (million USD) 4,6001,5802,5475,7037,678

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20192020202120222023
Foreign Trade (in % of GDP) 117.892.9101.6114.7107.2
Trade Balance (million USD) -3,792-3,165-3,790-5,100-6,078
Trade Balance (Including Service) (million USD) -1,616-3,041-3,065-2,426-2,643
Imports of Goods and Services (Annual % Change) 6.8-16.68.816.910.0
Exports of Goods and Services (Annual % Change) 10.9-37.623.537.49.5
Imports of Goods and Services (in % of GDP) 63.556.058.962.257.9
Exports of Goods and Services (in % of GDP) 54.336.942.752.549.3

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20242025 (e)2026 (e)2027 (e)2028 (e)
Volume of exports of goods and services (Annual % change) 2.03.86.64.06.0
Volume of imports of goods and services (Annual % change) 4.23.45.12.24.4

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

 
 

Main Partner Countries

Main Customers
(% of Exports)		 2023
Armenia 12.9%
Kazakhstan 11.5%
Türkiye 6.7%
China 5.1%
Bulgaria 4.1%
See More Countries 59.6%
Main Suppliers
(% of Imports)		 2023
Türkiye 16.5%
United States 13.2%
China 8.5%
Germany 6.2%
Japan 3.9%
See More Countries 51.6%

Source: Comtrade, Latest Available Data

 

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Political Outline

Current Political Leaders
President: Mikheil KAVELASHVILI (since 29 December 2024)
Prime Minister: Irakli KOBAKHIDZE (since 8 February 2024)
Next Election Dates
Presidential: 2029
Parliamentary: October 2028
Main Political Parties
Georgia has a multi-party system. The major political parties include:
- Georgian Dream (coalition comprising of Democratic Georgia; Conservative Party; Industry Will Save Georgia; Republican Party of Georgia; National Forum): nationalist, pro-market, pro-west, diverse
- People's Power: populist
- United National Movement (UNM): centre-right, largest opposition force, favors radical reforms and close ties with NATO and the European Union
- Progress & Freedom (P&F): centre, pro-Europeanism
- For Georgia: centre
- Girchi: libertarianism, pro-Europeanism
- European Socialists: social democracy
- Lelo: centre, liberalism.
Executive Power
The head of the state is the President who is elected by a popular vote for a five-year term. The President is the commander-in-chief of the armed forces and holds executive powers. The President is also the head of the Ministries of Energy and State Security; while the Prime Minister is the head of the remaining ministries. The President appoints the Cabinet of Ministers. The Georgian state is highly centralized, except for the two autonomous regions of Abkhazia and Ajara which have had special autonomous powers since Soviet rule.
Legislative Power
The legislature in Georgia is unicameral: the Parliament has 150 members, of which 120 are directly elected in a single nationwide constituency by closed, party-list proportional representation vote, while 30 are directly elected in single-seat constituencies by at least 50% majority vote, with a runoff if needed. The members of the Parliament serve a four-year term. The government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. The president cannot directly dissolve the parliament or veto its enactments without taking parliament into his confidence.
 

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