Despite officially reported economic growth, experts warn that Georgia’s business environment is rapidly deteriorating, marked by falling investor confidence, stagnating sectors, and increasing financial stress among small and medium-sized enterprises (SMEs).
Larisa Pataraia, a consulting expert with over a decade of experience advising Georgian firms, says the shift on the ground is stark. “We will not see an investor in the company in 2025,” she told BMGTV, citing a dramatic drop in investor activity and a growing reliance on crisis management services. “Today, I see no investors approaching us. We’ve pivoted almost entirely to anti-crisis services—helping clients boost sales, reduce costs, and optimize internal processes.”
According to Pataraia, industries like tourism, hospitality, retail, and clothing are under particular pressure. “Restaurants are closing, and many tourist facilities never opened this season due to a lack of bookings. While large businesses are adapting, SMEs are in crisis,” she warned. Rising cases of loan restructuring and financial rehabilitation further signal distress across the SME sector.
Economist Giorgi Khishtovani echoed this concern, noting that Georgia’s business climate has been in steady decline since peaking in Q2 2023. Citing the latest Business Association of Georgia (BAG) Index for Q2 2025, he said signs of stagnation are now visible across all major sectors except trade.
“Only the trade sector showed strong momentum this quarter, likely due to aggressive marketing campaigns,” Khishtovani observed. “But whether that trend is sustainable remains uncertain.”
Construction, industry, and services all recorded worsening conditions, and business expectations for the future have dropped across almost all sectors. Access to financing and weak demand continue to be major challenges, especially for industrial and service businesses.
Looking ahead, Khishtovani sees two potential scenarios: “In the best case, we may see stabilization if trade and construction recover. But more realistically, the current gains are short-lived, and we’re likely to see a further decline in the business climate in the coming quarters.”
In addition to economic pressures, Pataraia highlighted political uncertainty and legislative shifts as key factors undermining investor confidence. “If Georgia does not return to the Euro-Atlantic path, we will not only fail to attract new investors—existing businesses will struggle to survive,” she warned.
While official statistics may paint a picture of resilience, these expert assessments suggest growing disconnects between headline economic data and the real conditions faced by businesses on the ground—particularly those outside the trade sector. As 2025 progresses, Georgia’s economic trajectory may depend not just on external trade performance, but on policy clarity, political stability, and renewed investor trust.
By Team GT
