Georgia overview

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Dam in Georgia

In Georgia we focus on:

Supporting private sector competitiveness through innovation, enhanced value added and convergence with Deep and Comprehensive Free Trade Area (DCFTA) standards and obligations. We will continue supporting SMEs and the local private sector via the well-developed local banking sector with a focus on high-potential areas such as agriculture, hospitality and innovation where we plan to deploy support in workforce training skills focused on regional inclusion, youth and gender.

Deepening financial intermediation and developing local currency and capital markets to enable the private sector to have better access to finance.

Expanding markets through inter-regional connectivity, expanding Georgia’s potential as a regional link through further modernisation of the country’s infrastructure. The EBRD will explore the financing investments under private-public partnership frameworks that will enable Georgia to take advantage of its geographic position between the South Caucasus, Central Asia and Europe.

Renewable energy, resource efficiency and climate change adaptation to improve competitiveness and resilience of the economy. We will continue supporting the creation of renewable generation capacity in hydropower, wind and possibly solar, as well as building transmission lines to connect with regional markets. A special Energy Efficiency Action Plan will be developed to tackle excessive energy consumption.

Georgia has contributed €3 million to the Eastern Europe Energy Efficiency and Environment Partnership Fund.  Georgia is both a donor and a beneficiary of the fund.

The EBRD’s latest Georgia strategy was adopted on 8 December 2021

 
 

Georgia's policy response to the coronavirus crisis

The EBRD is monitoring Georgia's policy response to the coronavirus pandemic. Our biweekly publication identifies the major channels of disruption as well as selected impact and response indicators.

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Current EBRD forecast for Georgia’s Real GDP Growth in 2022 3.0%

Current EBRD forecast for Georgia’s Real GDP Growth in 2023 5.0%

Economic recovery in 2021 was stronger than expected, with GDP growth reaching 10.4 per cent. Consequently, the economy has fully recovered to pre-Covid-19 levels, even though the tourism sector, usually one of the main growth drivers, is still far from pre-pandemic levels. Instead, the recovery was mainly based on revived trade, manufacturing and ICT services on the production side and rising household consumption and net exports on the demand side. The strong recovery has been accompanied by increasing inflationary pressures on the back of higher international food and oil prices. Inflation reached a high of 13.9 per cent year-on-year in January 2022, before dropping to 11.8 per cent year-on-year in March 2022.

The National Bank of Georgia reacted by tightening monetary policy multiple times, with the refinancing rate standing at 11 per cent in March 2022. The current account deficit remained at a high level of 9.8 per cent of GDP in 2021, but international reserves rose to US$ 4.0 billion in March 2022, helped by significant financing from international development partners and covering more than four months of imports. The growth momentum is likely to be inhibited by the war on Ukraine as trade disruptions are likely and high energy and grain prices will keep inflation at elevated levels.

Georgia has a high export share to Russia, Belarus and Ukraine (approximately 23 per cent in 2021), and FDI might be negatively affected by rising security risks in the region. As a result of these factors, moderate GDP growth of 3.0 per cent is expected in 2022, before strengthening to 5.0 per cent in 2023. While risks remain high, the new three-year US$ 289 million Stand-By Agreement with the IMF, expected to be approved by the IMF Board in May 2022, would further support macroeconomic and financial stability.

 

Georgia in the EBRD’s 2021-22 Transition Report

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