EBRD raises Georgia's economic growth forecast to 6% for 2025

The European Bank for Reconstruction and Development (EBRD) has raised its economic growth forecast for Georgia, now predicting a 6% increase in the country’s GDP for 2025, up 1.4 percentage points from its previous estimate in September 2024.

The updated projection comes despite ongoing political instability and external economic pressures, Caliber.Az reports via Georgian media.

The EBRD, a major investor in Georgia, has injected approximately 5 billion euros into the country over the past three decades, funding 270 projects across various sectors. These investments, which include grants and loans with specific conditions, have contributed significantly to Georgia’s economic development.

While the revised forecast signals growth, the EBRD warns that Georgia’s economic expansion may slow in the coming years, projecting a further decline to 5% by 2026, nearing the country’s potential growth rate. This anticipated slowdown is attributed to several factors, including political uncertainty, weakening external balances, and a deceleration in credit growth.

The EBRD highlights that the growth of the private sector will be constrained by a reduction in foreign direct investment and a decrease in tourism revenue. These trends are largely driven by recent political unrest and large-scale protests, which have raised concerns among investors.

However, the bank notes that government-led infrastructure projects, particularly in transport, energy, and information technology, will partially offset these challenges. The EBRD maintains that despite these efforts, risks to the economy remain elevated.

The EBRD’s forecast mirrors the projections of other international financial institutions. Both the World Bank and the International Monetary Fund (IMF) expect Georgia’s economy to grow by 6% in 2025. In contrast, the United Nations predicts a 5.4% increase, while the European Commission forecasts 5.8%, the Asian Development Bank projects 5.5%, and Fitch Ratings anticipates 5.3%.

Meanwhile, Georgian economists from the PMCG company estimate that the country’s economic growth will slow to 3.6% this year. In contrast, the Georgian Investment Agency, Galt & Taggart, has outlined three growth scenarios based on political developments: a negative scenario with 2.4% growth, a baseline scenario with 6%, and an optimistic scenario with 7%.

In 2024, Georgia experienced a robust economic growth rate of 9.5%. This follows a 7.8% growth in 2023 and a 10.4% expansion in 2022.

By Khagan Isayev