Transit Georgia: Stability paves the way for investment ADB forecasts economic growth

A key indicator of the current Georgian government’s success is the attitude of investors and international financial institutions toward it. Generally, countries whose policies teeter on the edge of war and instability do not attract finance or investment. Until recently, Georgia faced such a threat, as the pro-Western opposition last year attempted to organise unrest, a “Maidan,” and an unconstitutional change of power under the pretext of “defending the European choice.”

The opposition’s anti-Russian actions made it quite likely that Georgia could become a “second front” in the Russia–Ukraine war. This would have been a catastrophic blow both to Georgian statehood and to the country’s transit role within the rapidly developing Middle Corridor.

However, the Georgian government has stood firm, strengthened its position, and continues to implement large-scale projects in the construction of transit infrastructure along the Middle Corridor. To support this, the country actively attracts credit from international financial institutions. In particular, Georgia receives substantial financing from the Asian Development Bank (ADB).

In early September 2025, the Asian Development Bank (ADB) provided Georgia with a sovereign loan of 68.2 million lari (over $25 million) to support the state budget and assist in implementing structural reforms in vocational education. The loan was issued in the national currency.

According to the Ministry of Finance, this is the first time an international financial institution has provided Georgia with a sovereign loan in its national currency, marking an important step in deepening cooperation between the ADB and the Georgian government.

Additionally, the ADB recently approved a $360 million loan for the construction of a new Batumi–Sarpi road leading to the Turkish border. This route is part of the East–West Highway, also known as the European transit road E-60. The funding will be used to build an 11-kilometre section connecting the new Batumi bypass with the Georgia–Türkiye border crossing at Sarpi.

“The Batumi–Sarpi road that completes the last-mile connectivity in Georgia’s road network will enhance the country’s regional position as a preferred route for trade and logistics across the region and create more economic opportunities for the people of Georgia,” said Lesley Bearman Lahm, ADB Country Director for Georgia.

The Asian Development Bank is highly optimistic about Georgia’s economic prospects over the next two years. The September report, Asian Development Outlook 2025, the ADB’s main annual economic publication, raised Georgia’s GDP growth forecast for 2025 to 7.0%, up from 6.0% projected in April. For 2026, the bank currently predicts growth to remain at 5.0%. According to the report, growth is supported by strong performance in services, information and communication technology — reflecting high IT sector productivity — as well as robust private consumption and a high level of reinvestment by foreign investors.

“Georgia’s steady economic growth amid global risks and uncertainties is an indication of a positive outlook for the future,” said Leslie Bearman Lam. “The country would benefit further from capitalizing on its strategic location and road network to attract more trade and cargo transit, while also deepening reforms to secure more stable long-term growth for its citizens.”

According to the report, inflation forecasts remain unchanged at 4.0% for 2025 and 3.0% for 2026, as predicted in April. This is supported by lower global fuel prices, a strengthened lari, and prudent fiscal policy. The weakening of the U.S. dollar in the first half of 2025 boosted the lari by 3.5%, while the fiscal deficit remained within 3.0% of GDP. Public debt stood at 35% of GDP.

According to the report, Georgia’s foreign trade sector also expanded. In the first half of 2025, goods exports grew by 13.7%, while imports increased by 12.4%. Re-export of automobiles, a key source of foreign currency, rose by 30.3%. Although the 25% U.S. tariff on imported cars, introduced in April 2025, is expected to raise prices for used vehicles and reduce Georgia’s auto re-exports, growth in the services sector—particularly tourism, transport, and information technology—is projected by the ADB to offset the impact of the anticipated slowdown in goods exports.

“Tourism revenues grew at an annual rate of 3.8%, building on record-high receipts in 2024, while overall service exports expanded by 10.2%, reflecting Georgia’s emerging role as a key transit route for Trans-Caspian trade and cargo movements.

Higher transfers from the US and Europe helped increase remittances by 3.5% in the first half of 2025, despite a 26.5% drop in transfers from Russia. Foreign direct investment (FDI) declined by 7.7%, mainly due to weaker investment in most sectors outside information and communication, though the share of reinvested FDI remained high at 83.6%.

Downside risks to growth include regional geopolitical tensions, heightened trade and financial vulnerabilities in global markets, economic fragmentation and trade sanctions, as well as slowing growth in Russia and other trade partners. In addition, persistently high global interest rates and tighter financial conditions may limit capital inflows,” the Asian Development Bank report notes.

The way influential international financial institutions such as the Asian Development Bank view Georgia today gives reason to hope that the country’s political stability will be maintained and that the dynamic development of its economy will continue. The ADB itself, forecasting stability and further growth, is actively providing loans to the country. Transit infrastructure projects remain among its priority areas. It is therefore symbolic that Georgia received an ADB loan precisely for the completion of the final section of the East–West highway, from Batumi to the border with Türkiye.

By Vladimir Tskhvediani, Georgia, for Caliber.Az