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Economic and political overview

Economic Overview

Georgia is a transition economy influenced by its past affiliation with 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. However, its economic openness and reliance on tourism make it vulnerable to external shocks like geopolitical tensions, global volatility, and pandemics. Georgia’s economy grew an estimated 9.5% in 2024, up from 7.5% in 2023. Growth was driven by ICT, trade, education, public administration, and construction, while the energy supply sector contracted. Despite declining war-related inflows and Russian migration, domestic consumption stayed strong, supported by rising wages and credit expansion (data EBRD). In the medium term, growth is projected to ease to 5%, aligning with its potential rate, as political uncertainty, weaker external balances, and slowing credit expansion weigh on economic activity.

On the fiscal side, tax revenues are estimated to have remained strong in 2024, reaching 25% of GDP, supported by tax hikes on gambling introduced in July. Total expenditure likely rose to 31% of GDP, driven by election-related spending. The fiscal deficit is estimated to have remained at 3% of GDP, in line with the fiscal rule. The current account deficit is estimated to have widened to around 5.5% of GDP in 2024 and 2025, due to slower exports and remittances from Russia. However, the deficit remained below the 10.3% level recorded in 2021 (data World Bank). Gross general government debt is estimated to average 38.7% in 2025-26, well below the 60% debt ceiling, with exchange rate depreciation posing a key risk to debt dynamics. Around 90% of external debt is owed to bilateral and multilateral creditors on concessional terms. Meanwhile, inflation remained low in 2024, averaging 1.1%, down from 2.5% in 2023 and well below the National Bank of Georgia’s 3% target. Risks to the outlook remain, considering that Georgia is currently in the midst of a political crisis following the disputed legitimacy of the October 2024 parliamentary elections. Tensions escalated with the unconstitutional self-convening of Parliament and the ruling party's decision to suspend preparations for EU accession negotiations. The situation deepened with the election of Mikheil Kavelashvili as president by the disputed Parliament, and his inauguration on 29 December 2024. President Salome Zourabichvili has maintained that she is still the legitimate president, despite the ongoing political turmoil. Protests against the ruling party have persisted, contributing to the continued instability in the country.

The Georgian unemployment rate is still high: it was estimated at 14.5% in 2024, down from 16.4% one year earlier and is expected to remain stable over the forecast horizon, despite the increased number of immigrants joining the labour market. According to the latest figures from GeoStat, 11.8% of the population was living below the absolute poverty line in 2023. Inequalities remain high compared to other economies in the region, with low levels of education and a rural population (40% of the total, with about a third of workers still engaged in low-productivity agriculture – World Bank). Overall, the average GDP per capita (PPP) was estimated at USD 27,363 in 2024 by the IMF.

 
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 1.85 million Georgians, out of a population of 3.71 million, constitute the domestic labour force (World Bank) and the country possesses many natural resources on its territory. Georgia has forests and woods, rivers and lakes, farmland, marble, minerals, manganese, iron, copper, coal, oil, clays, and sand, as well as wildlife. The country has an agricultural tradition, which has helped develop its economy for years. However, the agricultural sector has been in decline since 1995: nowadays, agriculture accounts for 6% of the GDP and employs 39.9% 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. In 2024, Georgia’s agricultural exports and re-exports rose 17% to USD 1.68 billion, with local exports up 19% to USD 1.38 billion, according to the Ministry of Environmental Protection and Agriculture. Food imports grew 8.8% to USD 2.2 billion, narrowing the agricultural trade deficit to USD 516 million, down 11%. As per the latest available figures by the National Statistics Office, the average annual income stands at GEL 1,932 for small holdings and GEL 20,871 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, contributing 18.9% of the GDP and employing 13.6% of the working population, while manufacturing accounts for 8% of the GDP (World Bank). The industrial sector mainly includes food processing and the manufacture of transportation equipment, such as 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 23.1 billion in 2024, 5.7% less than one year earlier, with production value also decreasing to GEL 20.1 billion (-3.8%).

Services is the most dynamic subsector of the economy, accounting for 62.1% of Georgia's GDP and employing around 46.5% 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 the 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 2024, the influx of international non-resident travellers to Georgia reached 7.4 million, marking a 4.2% increase compared to the preceding year's figures, but still below the pre-pandemic level. Concerning the banking sector, as of 2023, there were 15 commercial banks in operation in Georgia, with total assets worth GEL 65.58 billion (data KPMG). The two largest banks are TBC Bank Group PLC and Bank of Georgia Group PLC, which together hold around 70% of the total banking sector assets.

 
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 107% 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 ferroalloys (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% - data Geostat).

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, and the CIS state for 21.3% (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 helped 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 2023, merchandise exports amounted to USD 6.09 billion (+9.1% y-o-y), whereas imports reached USD 15.51 billion (+14.5% y-o-y). At the same time, exports of commercial services increased by 34.6% to USD 7.67 billion, while imports of services amounted to USD 3.83 billion (+26.5%). For the year as a whole, the World Bank estimated the country’s trade deficit at 8.6% of its GDP. Preliminary figures from Statistics Georgia show that, in 2024, the country’s external merchandise trade reached USD 23.44 billion, up 8.0% year-on-year. Exports totalled USD 6.56 billion (+7.8%), while imports rose 8.1% to USD 16.87 billion. The trade deficit stood at USD 10.31 billion, accounting for 44.0% of total trade turnover.

 
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, in December 2024, the party left the parliamentary majority to form what it termed a "healthy opposition"
- For Georgia: centre to centr-left, pro-Europeanism
- European Socialists: social democracy
- 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
- Girchi: libertarianism, pro-Europeanism
- Lelo: centre, liberalism.
Executive Power
The head of state in Georgia is the President, who is elected by an electoral college for a five-year term. The President serves a largely ceremonial role but is formally the commander-in-chief of the armed forces. Executive power is vested in the Prime Minister, who heads the government and oversees the Cabinet of Ministers. The Prime Minister is appointed by Parliament and holds responsibility for the day-to-day administration of government affairs. The President does not appoint the Cabinet. Georgia is a unitary state with a centralised government, although the Autonomous Republic of Adjara has a degree of self-governance under Georgian law. The region of Abkhazia is internationally recognised as part of Georgia but operates as a de facto independent entity following conflict and Russian support.
Legislative Power
Georgia has a unicameral legislature: the Parliament consists of 150 members who serve four-year terms. Of these, 120 are elected through a closed-list proportional representation system in a single nationwide constituency, while the remaining 30 are elected in single-member districts by a majoritarian system, requiring over 50% of the vote, with a runoff held if necessary. The government is accountable to Parliament and must maintain its confidence to remain in office. While the President holds a largely ceremonial role, they do not have the power to unilaterally dissolve Parliament or veto legislation without involving Parliament in the process, as most powers are exercised within the framework of parliamentary approval.
 

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