The World Bank in Georgia

Country Context

Source: Geostat

Georgia is an upper-middle-income country with a population of over 3.6 million people (2024). Located in the South Caucasus, it borders Armenia, Azerbaijan, the Russian Federation, and Türkiye. Over the past decade, the country has made notable gains in income growth and poverty reduction. As a result of sound macroeconomic management, GNI per capita (constant $ 2015) increased from $3,036 in 2010 to  $6,605 in 2024. Poverty (measured by $8.30 poverty line in 2021 PPP) declined from  77% in 2010 to an estimated 46% in 2024. Georgia’s job market experienced a strong recovery in recent years, with unemployment dropping from 20.6% in 2021 to 13.9% as of end-2024, and 14.5% as of end-June 2025, supported by rapid economic growth.  

Last Updated: Oct 09, 2025

Strategy

The current active lending portfolio of $1.1 billion includes nine operations. A major part of the current portfolio (45%) is committed to human capital development (including health, education and social protection), 24% to transport and the remaining 41% to digital development; regional connectivity; energy; irrigation; agriculture and land; entrepreneurship and innovation; as well as support to micro-small-and medium enterprises. 

The last Country Partnership Framework (CPF) covered FY19 – 23 and preparation of the next CPF was halted last year due to political upheaval and impending elections.

The Georgia-specific Advisory Services and Analytics (ASA) program addresses a broad range of development challenges, helps to shape the future cooperation with the client by identifying potential areas of collaboration, and provides recommendations to help the client mitigate the challenges identified through ASA. The ASA program in Georgia includes the upcoming Country Climate and Development Report—planned to be delivered in FY26—which is expected to help Georgia prioritize the most impactful actions that can reduce greenhouse gas (GHG) emissions and boost adaptation and resilience, while delivering on broader development goals. An active program of 11 trust funds totaling $5.8 million supports institutional capacity building, poverty, agriculture, water and land, finance, energy, governance and digital sectors.  

Last Updated: Apr 24, 2025

Recent Economic Developments

Economic activity expanded by 8.3% (yoy) in the first half of 2025, driven by consumption. Domestic consumption was supported by rising real wages (+7.8% (yoy) in Q1) and strong credit growth (+14.6% (yoy) in real terms). On the supply side, ICT, trade, and construction were the main contributors to growth. 

Annual Inflation accelerated to 4.8% in August, mainly due to higher food prices. The National Bank of Georgia has maintained its policy rate at 8% since May 2024, reflecting a cautious approach amid rising inflation and strong domestic demand. 

Financial sector indicators remain sound. Non-performing loans remained broadly stable (NPLs) at 2.5%, return on equity was 22%, and return on assets reached 3.7%.

The current account deficit widened to 8.6% of GDP in Q1 2025, reflecting weaker exports of goods and lower remittances, partly offset by strong service exports. In H1, goods exports grew by 13.7% (yoy), driven by re-exports. Remittances increased by 3.6% (yoy), while tourism receipts grew by 3.8% (yoy). FDI inflows remained subdued at 2% of GDP in Q1. The lari appreciated by 0.5 % (yoy) against the USD by end-July, while reserves increased by 7.5% (yoy), reaching 3.2 months of imports.

The fiscal performance remained solid, with a deficit of 0.2% of GDP in H1 2025. Revenues rose by 9% (yoy), driven by strong economic activity and improved compliance. Current spending increased by 13.4% due to significant rises in wages, social programs, and subsidies, while capital outlays fell by 13% due to project execution delays. Public debt declined to 34 % of GDP at end-June.

In 2024, robust economic growth (9.4%) was accompanied by an estimated 3.4 percentage points reduction in poverty at the USD 8.3 line (2021 PPP), supported by higher employment and wage growth. Growth is projected to reach 7% in 2025, prior to easing to 5% in the medium term, as consumption growth normalizes. Poverty is expected to continue to decline.  

Last Updated: Oct 09, 2025