In order to better understand the economic environment in which Georgian entrepreneurs operate we have studied public sources and prepared a small overview of the economic state of Georgia for June 2024.
Georgia's place in international economic rankings
- Georgia ranked 32nd out of 176 countries in the Heritage Foundation's Index of Economic Freedom, ahead of neighboring countries Armenia (47th), Azerbaijan (70th), Turkey (102nd), and Russia (131st) (1)
- In the European region, Georgia ranks 19th out of 44 countries, demonstrating economic freedom above the global and regional average (1).
Inflation and economic growth
Georgia's economy grew rapidly in the first five months of 2024, posting a 9.3% annualized growth rate (2). This was well above the International Monetary Fund's initial growth forecast of 4.8% (2).
Georgian Prime Minister Irakli Kobakhidze stated that this economic growth was "one of the highest in Europe" and allowed the government to increase the 2024 budget by ₾360 million ($128.59 million)(2). He attributed the strong economic performance to growth in exports, investment and the labor market.
Exports and trade
Georgia recorded record agricultural and food exports, reaching $1.4 billion, a 15% increase over the previous year (2). Wine exports also reached an all-time high of $259 million (2).
Value added in the agricultural sector doubled since 2012 to ₾4.8 billion ($1.71 billion), and investment in agriculture increased to ₾2 billion ($0.71 billion) out of a total investment of ₾7.5 billion ($2.68 billion)(2).
Financial and monetary performance
The fiscal deficit is projected to remain below 3% of GDP in 2024 and 2025, reflecting improvements in revenue administration, rationalization of tax expenditures, and effective public debt management (3). Government revenues are expected to grow to 28% of GDP in 2024 and 28.5% in 2025, driven by higher tax revenues (3).
Inflation is projected to accelerate slightly to 3.5% in 2024 and 4% in 2025 due to moderate commodity price increases (4). The Georgian lari may experience some downward pressure due to stabilizing remittances, which could slow or reverse inflows related to Russian migrants (3).
Outlook and challenges
Georgia's economy is expected to grow by 5% in 2024 and 5.5% in 2025, according to the Asian Development Bank (ADB) (3). Growth is expected to be driven by continued growth in tourism and investment, as well as recovery in industry and agriculture.
However, the ADB report also notes that geopolitical tensions in the region could slow services sector growth in 2024 before recovering in 2025 (3). The report also emphasizes the need to address the aging population, the gender labor force participation gap, and productivity challenges through skills development and technology adoption.
Overall, Georgia's economy has shown steady growth in the first half of 2024 due to strong exports, investment and labor market performance. However, the country faces some macroeconomic and demographic challenges that will require attention in the future.
Sources
(1) Georgia Ranks 32 on the 2024 World Economic Freedom Index - BM.GE
(2) Georgian Prime Minister reports to Parliament on domestic economic growth "one of ... https://agenda.ge/en/news/2024/39712
(3) Georgia's economy to grow 5% this year, 5.5% in 2025 - ADB https://www.adb.org/news/georgian-economy-grow-5-2024-5-5-2025-adb
(4) Georgia's economy grew 9.3% in Jan-May, Statistics Georgia reports https://agenda.ge/en/news/2024/39708
- Georgia ranked 32nd out of 176 countries in the Heritage Foundation's Index of Economic Freedom, ahead of neighboring countries Armenia (47th), Azerbaijan (70th), Turkey (102nd), and Russia (131st) (1)
- In the European region, Georgia ranks 19th out of 44 countries, demonstrating economic freedom above the global and regional average (1).
Inflation and economic growth
Georgia's economy grew rapidly in the first five months of 2024, posting a 9.3% annualized growth rate (2). This was well above the International Monetary Fund's initial growth forecast of 4.8% (2).
Georgian Prime Minister Irakli Kobakhidze stated that this economic growth was "one of the highest in Europe" and allowed the government to increase the 2024 budget by ₾360 million ($128.59 million)(2). He attributed the strong economic performance to growth in exports, investment and the labor market.
Exports and trade
Georgia recorded record agricultural and food exports, reaching $1.4 billion, a 15% increase over the previous year (2). Wine exports also reached an all-time high of $259 million (2).
Value added in the agricultural sector doubled since 2012 to ₾4.8 billion ($1.71 billion), and investment in agriculture increased to ₾2 billion ($0.71 billion) out of a total investment of ₾7.5 billion ($2.68 billion)(2).
Financial and monetary performance
The fiscal deficit is projected to remain below 3% of GDP in 2024 and 2025, reflecting improvements in revenue administration, rationalization of tax expenditures, and effective public debt management (3). Government revenues are expected to grow to 28% of GDP in 2024 and 28.5% in 2025, driven by higher tax revenues (3).
Inflation is projected to accelerate slightly to 3.5% in 2024 and 4% in 2025 due to moderate commodity price increases (4). The Georgian lari may experience some downward pressure due to stabilizing remittances, which could slow or reverse inflows related to Russian migrants (3).
Outlook and challenges
Georgia's economy is expected to grow by 5% in 2024 and 5.5% in 2025, according to the Asian Development Bank (ADB) (3). Growth is expected to be driven by continued growth in tourism and investment, as well as recovery in industry and agriculture.
However, the ADB report also notes that geopolitical tensions in the region could slow services sector growth in 2024 before recovering in 2025 (3). The report also emphasizes the need to address the aging population, the gender labor force participation gap, and productivity challenges through skills development and technology adoption.
Overall, Georgia's economy has shown steady growth in the first half of 2024 due to strong exports, investment and labor market performance. However, the country faces some macroeconomic and demographic challenges that will require attention in the future.
Sources
(1) Georgia Ranks 32 on the 2024 World Economic Freedom Index - BM.GE
(2) Georgian Prime Minister reports to Parliament on domestic economic growth "one of ... https://agenda.ge/en/news/2024/39712
(3) Georgia's economy to grow 5% this year, 5.5% in 2025 - ADB https://www.adb.org/news/georgian-economy-grow-5-2024-5-5-2025-adb
(4) Georgia's economy grew 9.3% in Jan-May, Statistics Georgia reports https://agenda.ge/en/news/2024/39708