The Georgian economy continues to surprise with its rapid growth this year. While key sectors such as construction and agriculture declined, ICT, transportation, and financial services drove growth. The country also posted a budget surplus, strengthened its national currency, and increased its international reserves. However, delays in major infrastructure projects and accelerating inflation could put pressure on future growth.
Georgia’s economy expanded by 9.0% year over year in the first quarter of 2026, exceeding initial forecasts. GDP reached 24.8 billion lari (about $9.2 billion).
The economy continues its transition toward a service-oriented model. The services sector’s share of GDP increased to 66.8%, up from 66.0% a year earlier. ICT posted the strongest growth, with gross value added rising 36.0% year over year. Transportation and warehousing grew 18.0%, followed by accommodation and food services (HoReCa) at 12.4% and finance and insurance at 11.7%, driven by the digitalization of services, fintech development, and continued foreign direct investment inflows. Trade remained the country’s largest economic sector, although its growth slowed to 5.5%.
GDP growth could have been even stronger but was held back by weakness in several key industries. Agriculture contracted 3.3%, construction declined 2.0%, and manufacturing expanded by just 0.3%.
ICT expansion boosts the services sector
Georgia’s ICT sector has grown rapidly since 2022 following the large-scale relocation of Russian, Ukrainian, and Belarusian professionals. The growth has been so strong that, according to an International Monetary Fund report, local ICT employers are increasingly reporting shortages of qualified workers.
The influx of relocated workers has boosted not only the ICT sector but also other service industries, strengthening domestic demand. Georgia recorded a positive net migration balance of 17,100 people in 2025. According to the National Bank of Georgia, 31.3% of Russian citizens, 25.6% of Belarusian citizens, and 18.5% of Ukrainian citizens have either lived in the country for more than a year or plan to remain for at least that long.
Infrastructure investment remains a priority
Expanding Georgia’s transit capacity remains a government priority. According to IMF estimates, annual capital investment in road infrastructure alone has averaged 7% to 8% of GDP over the past two decades.
A flagship project is the East-West highway, part of the Trans-Caspian International Transport Route. Once construction is completed by the end of 2030, travel time between Georgia’s eastern and western borders is expected to be cut nearly in half, to four to five hours.
The government’s focus is now shifting to the “last mile” by improving transportation links to the borders with Turkey, Armenia, and Azerbaijan, including through the modernization of rail infrastructure, ports, and airports.
Last month, the World Bank approved financing for the TC-GATE project, which aims to modernize Georgia’s transportation network, eliminate infrastructure bottlenecks, and implement institutional reforms in the road transport sector. The project has a total budget of $750 million. The World Bank will provide $372 million, with the remaining funding coming from the Asian Infrastructure Investment Bank and the Asian Development Bank. TC-GATE is expected to directly benefit about 900,000 people in Georgia.
Inflation accelerates
Higher oil prices driven by the conflict in the Middle East have increased fuel and utility costs across Georgia. As a result, annual inflation accelerated to 5.9% in April.
At its scheduled May meeting, the National Bank of Georgia revised its baseline outlook and raised its policy rate by 0.25 percentage points. Tighter monetary policy is expected to stabilize inflation expectations and limit the secondary effects of rising energy prices.
Trade balance improves
Georgia’s foreign trade balance improved significantly in the first quarter. Total trade turnover reached $5.9 billion. Exports increased 23.4% year over year to $1.7 billion, while imports fell 7.1% to $4.1 billion.
The country’s leading exports during the quarter were automobiles (21.1%, or $365 million), petroleum products (12.1%, or $208 million), and precious metal ores and concentrates (9.9%, or $170 million).
Outlook remains favorable
Amid continued uncertainty in global markets, the World Bank lowered its forecast for Georgia’s economic growth by 0.5 percentage points, to 5.0%, in the June edition of its Global Economic Prospects report. By contrast, the IMF raised its forecast from 5.3% to 6.5%. The Georgian Ministry of Finance had projected more modest growth of 5.0% in its November forecast.
