A significant increase in the service sector and domestic consumption in Georgia has accelerated the economic progress of the country in 2024, reads a new report of the Asian Development Bank (ADB).

According to the Asian Development Bank, the September 2024 publication of the Asian Development Forecast predicts a 7% increase in Georgia’s gross domestic product (GDP), which is a significant increase from the 5% expectation announced in April of 2024. The growth forecast for 2025 remains unchanged at 5.5%.

“The growth of Georgia’s economy was driven by a 9.7% increase in transportation and warehousing, 8.5% in housing and food services, 12.2% in information and communication services, and 9.6% in finance and insurance. Domestic consumption - the main motivator of economic growth - boosted domestic investment. Unemployment fell to 14% in the first quarter of 2024.

Georgia’s economy continues to make steady progress despite geopolitical risks”, - said Leslie Bearman Lam, director of ADB in Georgia.

“This is a favorable condition for the country to continue strengthening regional connectivity, supporting the private sector, developing human capital and investing in climate-resistant agriculture.

Inflation decreased to 1.1% in the first half of 2024, although it was recorded at 2.2% in June. The main reason for this was the increase in transport costs, due to the unstable prices of oil products and the increased prices of tobacco and alcohol. As a result of a relatively stable exchange rate and prudent fiscal policy, the country has avoided faster price increases.

An 18.5% increase in revenues in the first half of 2024 eliminated the fiscal deficit. Balanced budget and stable GEL reduced the share of public debt in GDP to 38.9% in the middle of this year, which was 39.2% last year. In total, remittances from other countries decreased by 30.3%, and from the Russian Federation - by 71.4%. The sharp drop was partially offset by increased remittances from the US and Europe.

The current account may be affected by the country’s internal political instability and geopolitical risks and put pressure on the exchange rate. In addition, trade disruptions as a secondary effect of Russia’s invasion of Ukraine could impact supply chains and create inflationary pressures due to higher prices of daily consumer goods.

ADB has been supporting Georgia since 2007 and is one of the largest multilateral development partners of the country. ADB has provided 4 billion USD worth of loans, grants and technical assistance to Georgia. ADB’s new 5-year cooperation strategy with Georgia aims to help the country develop into a green and inclusive regional gateway, promote public and private sector investments, reforms, knowledge enhancement, building climate-resilient infrastructure and regional integration.

ADB’s mission is to contribute to the successful, multilateral, sustainable and sustainable development of the Asia-Pacific region. At the same time, it continues to work to eradicate extreme poverty in the region. The organization founded in 1966 unites 68 countries, among which 49 are represented from the Asian region”.