The European Commission’s Spring 2025 Economic Forecast reported that Georgia’s economy is expected to slow down but remain resilient in the coming years. After growing by a staggering 9.4% in 2024, the Commission projects that Georgia’s economic activity will ease to 5–6% annually in 2025 and 2026, still well above average for the region.
The report attributes the projected slowdown to a high base effect but maintains that the overall performance will remain ‘robust,’ partly driven by “positive spillovers from Russia’s war of aggression on Ukraine.”
Consumption-led growth
Growth will continue to be fueled primarily by private and government consumption which increased in 2024 because of rising wages, higher employment, and expanding consumer lending.
“Private consumption is set to remain the main growth driving factor, supported by strong consumer lending and continued, albeit slower, increases in real wages,” the report says. Public and business investment are also expected to contribute, although business confidence has taken a hit in early 2025 amid political tensions.
Labor market sees strong gains
The labor market displayed significant improvement in 2024. The unemployment rate fell from 16.4% in 2023 to 13.9%, while the employment rate rose by 2.5 percentage points, though it still sits at a relatively low 47.1%.
Real wages surged 15% in 2024, driven by multiple factors: the influence of skilled migrants from Russia (especially in IT), labor shortages, increased housing costs, and declining inflation. Wage growth is projected to ease but stay above productivity growth in the medium term.
External risks and uncertainty
Despite the positive outlook, the Commission warns that domestic political instability and regional geopolitical tensions could halt both business and consumer sentiment.
“The forecast is subject to an unusually high degree of uncertainty,” the Commission cautions, pointing to both internal and external risk factors.
Nonetheless, the report points out that Georgia’s public debt-to-GDP ratio will continue declining, and the general government deficit will remain contained, revealing solid fiscal management amid challenging conditions.
