Page 13 - Caucasus Outlook 2025
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     Investment grew during the first half of 2024, supported by favourable financial conditions, including increased business lending. Nonetheless, foreign direct investment (FDI) declined in the third quarter of 2024.
Georgia's decision to delay its EU accession process until 2028, coupled with ongoing mass protests, has cast a shadow over its economic outlook. This concern has been echoed by leading Georgian companies, banks and international rating agency Fitch Ratings.
Private consumption is expected to remain the main driver of growth, according to the European Commission’s report, though it will face headwinds from slowing wage growth, reduced loan activity, and rising inflation.
While Georgia’s tourism and service sectors have posted strong revenue gains, rising imports – driven by domestic demand – have continued to outpace export growth.
Net exports are forecast to have a neutral impact on growth in 2025 and 2026, as increased service exports are anticipated to offset the growth in imports.
2.1.2 Industrial production
In the second quarter of 2024, the business sectors with the highest production values were manufacturing (20.3%), trade (19.0%), construction (18.1%) and transportation and storage (9.1%).
Manufacturing turnover increased significantly, rising from GEL3.8bn in Q2 2023 to GEL4.6bn in Q2 2024 – a growth of 20.1%. Similarly, turnover in the mining and quarrying sector grew from GEL327.3mn to GEL409.2mn, marking a 25.0% increase.
 2.2 Macroeconomy – Armenia
    In 2024, Armenia's economy demonstrated robust performance across key macroeconomic indicators. GDP reached approximately $25.41bn, translating to a GDP per capita of $9,150. The country experienced a real GDP growth rate of 7.5%, driven by strong domestic demand and increased exports of basic metals. Inflation remained low, with the consumer price index (CPI) at 128.90. The general government gross debt stood at 53.14% of GDP, amounting to $13.50bn, while government revenue and expenditure were 24.88% and 29.49% of GDP respectively.
The unemployment rate declined slightly to 12.5%. Armenia's external
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