EBRD raises Georgia’s economic growth forecast to 6.5% in 2024

The European Bank for Reconstruction and Development has raised Georgia's economic growth forecast for 2024 by 1.3 percentage points, to 6.5 percent, from its previous prediction in May.

The latest Regional Economic Prospects report of the Bank, released on Thursday, said the revision to this year’s forecast for the country reflected “strong growth” in manufacturing output.

The report said Georgia's economy continued to grow at a robust rate of 9.1 percent year-on-year in the first half of the year, driven by information and communications technology, financial services, construction, and transport sectors. However, the growth in these sectors has slowed due to decreased financial inflows linked to the war in Ukraine and reduced migration from Russia, it added.

The contribution of domestic consumption to gross domestic product growth has increased, while net exports of services and money transfers have declined, the report said. Despite these challenges, the exchange rate of the national currency lari against the US dollar has remained stable, thanks to interventions by the National Bank of Georgia, albeit at the cost of reduced foreign reserves, it added.

The EBRD said tourist inflows from Russia to Georgia had decreased, but an increasing number of tourists from European Union countries and Turkey had helped sustain revenues in the tourism sector.

Inflation dropped sharply in 2023 and further eased to one percent in August 2024. The EBRD said the Georgian central bank responded to falling inflation with policy rate cuts, bringing the rate down to eight percent in May.

However, the report said, upcoming parliamentary elections and uncertain regional geopolitical developments pose “major risk factors” for Georgia's economy.

The EBRD said the GDP growth was forecast to moderate to 4.6 percent in 2025 in Georgia.

As for other countries in the region, the EBRD forecasts 6.2 percent growth for Armenia, 3.8 percent for Azerbaijan, 3.2 percent for Moldova, three percent for Ukraine, 2.7 percent for Turkey and 3.6 percent for Russia.

The Asian Development Bank has also raised Georgia’s economic growth forecast, saying the gross domestic product of the country would grow by seven percent this year instead of the previous projection of five percent made in April, in a new report published on Wednesday.