Georgia

Georgia is an upper-middle-income country with a population of 3.7 million people (January 1, 2025). 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 $6,535 in 2024. Poverty (measured by $8.30 poverty line in 2021 PPP) declined from 77% in 2010 to an estimated 42.2% in 2025. 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 remained stable as of end-2025, supported by rapid economic growth.

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Economic activity expanded by 7.5% (yoy) in 2025, primarily driven by consumption. Domestic private consumption (+8.2%) was supported by rising real wages (+11.5%) and strong credit growth (+10.1% in real terms). On the supply side, ICT, education, and trade were the main contributors to growth.

Annual Inflation accelerated to 4.6% in February 2026, 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 slightly increased yoy to reach 3.9% as of end-February 2026.

The current account deficit narrowed to 2.6% of GDP in 2025 (from 4.6 % in 2024), reflecting stronger exports of services (+7 %) and higher remittances (+5.0 %) partly offset by weaker goods exports growth (up 12.1%), driven by re-exports of cars. Tourism receipts grew by 6%. Net FDI inflows remained subdued at 3.6% of GDP in 2025. The lari appreciated by 0.5% (yoy) against the USD by end February 2026, while reserves increased by 57.3% (yoy), reaching 3.9 months of imports of goods and services.

Georgia’s fiscal performance remained solid, with a deficit of 1.7% of GDP in 2025. Revenues rose by 11% (yoy), driven by strong economic activity. Current spending increased by 14% due to rises in wages, social programs, and subsidies, while capital outlays fell by 18% due to project execution delays. Public debt declined to 34% of GDP at end-2025.

Economic growth is expected to moderate to 5.0% in 2026, reflecting weaker external conditions and softer domestic demand. The conflict in the Middle East is expected to weigh on growth by raising energy and transport costs, disrupting trade routes, and weakening external demand from trading partners.

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Since 1992, the World Bank Group has been a pillar of support for Georgia, contributing to the development, growth, and modernization of the country, leading to notable enhancements in citizens’ quality of life.

The World Bank’s active portfolio in Georgia comprises eight projects with total commitments of $975.3 million, spanning a diverse range of sectors. Human capital investments account for 51.5% of the portfolio and focus on improving education quality and strengthening health and social protection systems. This is followed by transport and connectivity investments (11.2%), which reinforce Georgia’s strategic role as a Middle Corridor transit hub linking Europe and Central Asia. Energy investments —supporting enhancements in energy transmission and generation as well as the first phase of the Black Sea Submarine Cable—represent 10.8% of the portfolio. A further 10.6% is dedicated to private sector development, access to finance and jobs creation, supporting recovery and growth of micro-, small- and medium-sized enterprises (MSMEs), with a particular emphasis on women-led firms. Agriculture and rural resilience, along with digital infrastructure and skills development, account for the remainder of the portfolio.

A strong jobs agenda cuts across all engagements. Transport investments generate substantial construction employment and broader economic multiplier effects, particularly in lagging regions. Digital and rural connectivity expands market access and enables remote employment opportunities, while MSMEs support facilitates the mobilization of private capital and enterprise growth.

Sustaining the jobs agenda remains central to the World Bank Group’s engagement in Georgia, alongside a selective, people-centered approach with a strong focus on regional development. The dialogue on the future program is structured around four engagement areas: regional connectivity; human capital development; jobs and productivity; and resilience, with digital development serving as a cross-cutting theme across all areas. In the FY26 pipeline a new operation, the Trans-Caspian Corridor-Georgia Accessibility and Transport Enhancement Project, combines IBRD-IFC interventions in rail and road infrastructure, aiming to improve performance and resilience on the Georgian section of the Trans-Caspian Transport Corridor. The project is to be co-financed by the Asian Development Bank and the Asian Infrastructure Investment Bank.

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