The Georgian economy is expected to grow moderately in 2024 due to slowing external demand and decreased expansion of services before recovering slightly in 2025, according to a new Asian Development Bank (ADB) report.
The Asian Development Outlook (ADO) April 2024, ADB’s flagship annual economic publication, forecasts Georgia’s gross domestic product (GDP) to grow by 5% in 2024. Growth is expected to accelerate to 5.5% in 2025, boosted by continued gains in tourism and investment.
“Georgia has been growing steadily in recent years,” said ADB Country Director for Georgia Lesley Bearman Lahm. “A strong focus on regional cooperation, private sector-led growth, developing the country’s undoubted human capital, and adopting policies and actions that fast-track the transition to a greener and more climate resilient economy will help to accelerate prosperity and strengthen social security.”
Inflation is projected to accelerate slightly to 3.5% in 2024 and further to 4% in 2025 as commodity prices rise moderately. The fiscal deficit is projected to satisfy the government’s fiscal rule by remaining below 3% of GDP in 2024 and 2025, this year and next, reflecting further improvements in revenue administration, rationalization of tax expenditures, and sound management of public debt. Revenue is projected to rise to 28% of GDP in 2024 and 28.5% in 2025 due to higher tax collections.
Geopolitical tensions in the region may slow growth in services to 5.5% in 2024, before accelerating to 6.3% in 2025 on the back of faster growth in tourism. Growth in industry is projected to accelerate to 4.2% in 2024 and 4.9% in 2025, reflecting higher output of ferroalloys. Agriculture is expected to slow to 0.5% in 2024, before picking up again to 1.1% next year with higher government support for agricultural credit and insurance and expanded investment in new technologies.
According to the ADO, imports are expected to expand at a slower rate of 6.1% in 2024 mainly due to slower domestic growth and moderate vehicle reexports, before rising by 11.1% in 2025. Money transfers are forecast to stabilize at around $3 billion over the next 2 years, which could put downward pressure on the lari from slowing or reversing inflows associated with Russian migrants.
Georgia is experiencing an aging population because of below-replacement fertility, increasing life expectancy, and outmigration of working-age people. To promote social inclusion, the government needs to strengthen social protection programs and create new jobs for the elderly who are interested and able to work. Productivity can be enhanced through skills development and greater use of technology. Despite persistent labor shortages, a large gap remains between the labor force participation rates of men and women. It is critical for the government to introduce policies that encourage women to enter the labor force.
ADB has supported Georgia since 2007 and is one of the country’s largest multilateral development partners. ADB’s loans, grants, and technical assistance to Georgia total $4 billion. ADB’s new 5-year country partnership strategy with Georgia aims to help the nation develop into a green and inclusive regional gateway, support sovereign and private sector investments, policy reforms, capacity building, climate resilient infrastructure and regional integration.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
