Tbilisi, Georgia – Georgia’s current account balance, excluding reinvested earnings, has remained in surplus for four consecutive quarters, according to TBC Capital’s latest macroeconomic update, highlighting the country’s continued resilience despite heightened geopolitical uncertainty.
In the first quarter of 2026, the seasonally adjusted current account recorded a surplus equivalent to 0.1% of GDP, excluding reinvested earnings. Before seasonal adjustment, the current account showed a deficit of 3.2% of GDP. Although the surplus narrowed considerably compared to the previous three quarters, it remained positive despite the ongoing military conflict in the Middle East, in line with TBC Capital’s expectations. The resilience largely reflects the offsetting effect of lower tourism revenues in March and higher oil import costs by stronger export performance.
From a practical perspective, a current account surplus means that Georgia was a net creditor to the rest of the world during the period, with residents earning more foreign currency than they spent abroad. The current account measures the balance between income received from and payments made to the rest of the world through trade and cross-border financial flows, including remittances, labor income, dividends, reinvested earnings, and interest payments. Correspondingly, the financial account reflects how a current account surplus is invested abroad or how a deficit is financed through foreign capital, such as direct or portfolio investments.
Prior to 2025, Georgia recorded a seasonally adjusted current account surplus only once—in the third quarter of 2022, shortly after the outbreak of the Russia–Ukraine war. Since the second quarter of 2025, however, the balance has remained positive for four consecutive quarters, averaging 1% of GDP over the period, the strongest performance on record. According to TBC Capital, this has been one of the key factors supporting the appreciation of the Georgian lari and the accumulation of foreign exchange reserves over the past year.
Key Drivers of Georgia’s External Balance
Over the past four quarters, the largest sources of foreign currency inflows were:
- Merchandise exports – 26.4% of GDP
- Tourism revenues – 12.3% of GDP
- Net remittances – 10.9% of GDP
- ICT services exports – 3.8% of GDP
On the expenditure side, merchandise imports remained the largest outflow at 44.1% of GDP, while dividend and interest payments together accounted for 4.5% of GDP.
Overall, the current account remained in surplus after excluding reinvested earnings. Including reinvested earnings, which amounted to 2.9% of GDP, the current account posted a deficit of 1.9% of GDP.
First Quarter Shows Significant Improvement
Before seasonal adjustment, Georgia’s current account recorded a USD 298 million deficit in the first quarter of 2026. However, this represented a USD 271 million (48%) improvement compared to the same period of the previous year.
As in 2025, the improvement was driven primarily by the ICT sector, with exports of ICT services increasing by USD 167 million year-on-year. An additional USD 190 million improvement came from higher remittance inflows, lower dividend payments, an improved trade balance, and stronger labor income earned abroad.
These gains were partly offset by an USD 84 million deterioration in net exports of transportation services, reflecting weaker freight transport exports alongside higher imports of transportation services.
Foreign Direct Investment Remains Modest
On the financial account, foreign direct investment excluding reinvested earnings totaled USD 110 million during the first quarter, remaining relatively subdued in line with recent years.
Net portfolio investment inflows reached USD 452 million, including USD 265 million generated by Georgian residents reducing their foreign asset holdings—primarily through the sale of debt securities—and USD 187 million from new foreign investment.
As a result, Georgian residents’ foreign portfolio assets, which had expanded significantly in recent years, declined by 4.5% compared with the end of 2025, standing at USD 4.6 billion at the end of March, equivalent to 11.7% of GDP.
At the same time, Georgia repaid USD 137 million more in external debt than it borrowed, continuing the trend observed last year. Of this amount, USD 73 million reflected a reduction in government external debt.
Because total foreign currency inflows exceeded outflows, Georgia’s gross international reserves increased by USD 148 million during the first quarter.
According to the latest data, reserve accumulation accelerated further in the second quarter, supported by excess foreign currency supply in the domestic market. By June, gross international reserves had reached USD 7.1 billion, an increase of USD 800 million compared to the previous quarter. Excluding the IMF’s Special Drawing Rights allocation of USD 469 million, TBC Capital estimates net international reserves at approximately USD 4.6 billion.
Outlook
Given the continued increase in net foreign currency inflows, TBC Capital expects the current account balance to improve further in the second quarter.
For the second half of the year, the baseline scenario assumes a gradual normalization of foreign currency inflows. However, uncertainty remains elevated due to the risk of renewed escalation in the Middle East.
TBC Capital forecasts that Georgia’s current account deficit will amount to 1.5% of GDP in 2026. Excluding reinvested earnings, the current account is expected to remain in surplus at approximately 1% of GDP.
The full publication is available on the TBC Capital website:
https://tbccapital.ge/ge/publications/all-publications/singleview/30007587-macro-update-georgia
