Page 12 - Caucasus Outlook 2024

2.0 Macroeconomic Outlook 2.1 Macroeconomy - Georgia
In 2023, Georgia's economy did surprisingly well, according to brokerage Galt & Taggart, despite tough global challenges, like the wars between Russia-Ukraine and Israel-Hamas, and increasing interest rates in the US and Europe. The country saw strong economic growth, with falling inflation and unemployment, and the Georgian currency, the lari, stayed steady.
From January to November, Georgia’s economy expanded by 6.9% y/y. It's expected that the whole year will show similar growth. A notable point is that Georgia's GDP per person will likely surpass $8,100, making it a leader in the Caucasus region. Investment has been a key driver of this growth, particularly in sectors like services, which include trade, construction, and education.
Inflation dropped significantly and stayed below the 3.0% target set by Georgia's National Bank since April 2023. This allowed the bank to lower interest rates, which should support the economy in 2024. Unemployment also fell to 16.8% from January to September, and average wages went up by 17.4%, with the highest salaries in the IT, finance, and construction sectors. With inflation low, this wage increase means people can buy more with their money.
The Georgian currency stayed stable throughout 2023, which helped boost consumer and investment confidence. Even though financial flows from Russia became normal again in 2023, Georgia still saw strong foreign exchange earnings, keeping its current account deficit at a low 4.5% of GDP. New sources of foreign income, like IT service exports and more international students, also contributed to this.
Bank lending, especially to businesses, grew faster. Fiscal health improved in 2023, with a budget deficit expected at just 2.8% of GDP and government debt at 38.2% of GDP. A stable lari meant that foreign debt was easier to manage.
Lastly, Georgia built up its monetary and fiscal defences, crucial for handling future external shocks. By November 2023, the National Bank of Georgia's international reserves hit a record high of $5.1 billion.
Georgia key economic figures and forecasts
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