**Georgia’s Economy to Slow Down but Still Reach 5-6% Growth in 2025 and 2026**
The European Commission has released its 2025 Economic Forecast, which predicts that Georgia’s economic growth will slow down but still reach a robust 5-6% in 2025 and 2026. This forecast is partly due to the positive spillovers from Russia’s war on Ukraine.
According to the report, Georgia’s economy grew by 9.4% in 2024, driven largely by surging private consumption, strong wage increases, employment growth, and rising consumer loans. The report also notes that the country’s business confidence has been deteriorating due to domestic political developments and wider geopolitical tensions.
The Commission expects that growth will be contributed to consumer lending, business loans, and strong public investments, but warns that there is an unusually high degree of uncertainty surrounding this forecast. This uncertainty stems from Georgia’s domestic politics and global events, which may affect business and consumer sentiments negatively.
**Key Statistics**
* Georgia’s economic growth stood at 9.4% in 2024.
* The unemployment rate fell significantly from 16.4% in 2023 to 13.9% in 2024.
* Real wages increased by 15% in 2024 due to various factors, including the influence of high-skilled Russian migrants and Georgian companies’ efforts to compensate for rising living costs and labor shortages.
* The inflation rate rebounded to 3.4% in April 2025 and is expected to reach 4% for the year.
**Outlook for 2025 and 2026**
The report expects that Georgia’s current account deficit will slightly widen in 2025 and 2026, while the surplus in services is set to rise due to increasing tourist inflows. The trade deficit is also projected to increase as imports grow faster than exports.
In terms of government finances, the Commission predicts that the general government deficit will remain around 2% of GDP through 2026, well below the 3% ceiling from Georgia’s fiscal rule. The government’s debt is expected to decline further in the coming years.
**Commentary**
While Georgia’s economy has been growing rapidly in recent years, this forecast suggests that growth may slow down due to various factors. However, the Commission still expects a robust 5-6% growth rate for 2025 and 2026, which is positive news for the country.
It’s worth noting that the report highlights the importance of addressing Georgia’s domestic political developments and global events to ensure sustainable economic growth. The government will need to implement policies that promote business confidence, reduce inflation, and improve fiscal discipline in order to achieve these forecasts.
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