The Georgian economy is expected to grow steadily in 2025 amid global uncertainties and geopolitical risks and can expand further through developing green connectivity and energy networks, according to a new Asian Development Bank (ADB) report.
The Asian Development Outlook (ADO) April 2025, ADB’s flagship annual economic publication, forecasts Georgia’s gross domestic product (GDP) to grow by 6.0% in 2025. Growth is expected to ease to 5.0% in 2026, as services and inward money transfers are expected to slow.
Strong domestic demand boosted growth nearly into double digits in 2024, with faster expansion in all main production sectors. Gains in consumption and net exports offset a small decline in investment. Relatively unchanged food prices and a decline in prices for other goods brought inflation below 2%.
Growth is expected to slow in 2025 and 2026 with slower expansion in services, while inflation is projected to accelerate modestly because of higher import prices. Harnessing green connectivity can spur inclusive growth.
The Highlights
Strong domestic demand boosted growth from 7.8% in 2023 to an estimated 9.5% in 2024, with gains in all major production sectors.
On the demand side, consumption was the main growth driver. Expansion in private consumption accelerated from 4.5% in 2023 to 9.6%.
Inflation slowed from 2.5% in 2023 to 1.1% as food price inflation fell from 3.9% to virtually zero. This reflected an absence of significant supply shocks, which kept import price inflation low despite higher transport costs and strong domestic economic growth.
The fiscal deficit narrowed slightly, from 2.4% in 2023 to 2.3%, as rapid economic expansion boosted revenue growth.
The banking system showed continued strength, with credit growth accelerating slightly. The ratio of dollarized deposits included in broad money increased slightly to 49.3% from 47.0% in 2023. Credit dollarization by contrast declined by 2.0 percentage points to 42.1%, reflecting central bank prudential measures to reduce unhedged borrowing in the economy.
A slowdown in import growth helped narrow the current account deficit from 5.6% of GDP in 2023 to 5.1% in 2024. Despite rapid economic expansion, growth in imports slowed from 15.2% in 2023 to 8.1% because of slower growth in vehicle imports.
Growth is projected to normalize to 6.0% in 2025 and 5.0% in 2026 with declines in Russian migrants and inward money transfers.
On the demand side, adjustments in consumer spending are projected to slow growth in domestic demand. Growth in private consumption is projected to decelerate to 4.8% in 2025 and 3.5% in 2026 as a decrease in the number of Russian migrants curbs total spending.
Inflation is projected to increase to 4.0% in 2025 on higher import prices and then ease toward the central bank’s 3% target as growth slows.
Fiscal policy is expected to remain broadly unchanged over the medium term. The fiscal deficit is projected to increase slightly to 2.5% of GDP in 2025 and 2.6% in 2026 but remain well under 3%.
The current account deficit is expected to widen in 2025 and 2026. Weakness in global markets and uncertainty affecting key trade partners are likely to slow growth in foreign finance inflows.
Looking ahead, Georgia can benefit further from deeper integration with advanced economies, particularly in the EU and Asia.
Check out the full report here.
By Team GT
