The Executive Board of the International Monetary Fund has released the results of its latest consultations with the Georgian authorities, highlighting that the country’s economy performed remarkably well despite increased domestic and geopolitical uncertainty.

According to the report, annual growth has averaged over 9 percent since 2021, headline inflation has returned to target after undershooting for two years.

“The Georgian economy has performed remarkably well despite elevated domestic and geopolitical uncertainty. Annual growth has averaged over 9 percent since 2021, headline inflation has returned to target after undershooting for two years, and public debt declined to 36 percent of GDP in 2024”, the report said.

The IMF attributed the robust growth was driven by a strong post-pandemic recovery and sustained expansion in the information and communication technology (ICT) and transport services sectors, supported by immigration, financial inflows, and transit trade linked to the war in Ukraine.

“These trends have boosted per capita income and reduced unemployment and poverty. Inflation has remained low, aided by tight monetary policy and a strong lari”, the IMF added.

The International Monetary Fund noted that growth was projected to ease to 7.2 percent in 2025 and converge to its potential rate of 5 percent in the medium term as domestic demand decelerates.

“Inflation is expected to remain near target and public debt to stabilize near current levels with continued prudent monetary and fiscal policy”, the IMF continued.

According to the report, a resolution of the war in Ukraine may reverse some gains from migration and transit trade, but greater regional stability and reconstruction could offset these effects.

“Direct exposure to global trade tensions is limited, given Georgia’s low export share to the US and exemptions for key products. However, indirect effects from weaker investor sentiment, slower trading partner growth, or supply chain disruptions could weigh on exports and raise import costs”, the Fund said.

“Georgia might benefit from lower oil prices and increased trade diversion. Domestically, heightened political uncertainty and potential sanctions could dampen FDI, tourism, and pressure the lari. Georgia’s fiscal and financial buffers would help cushion adverse shocks”, the report continued.

The IMF concluded by emphasising that amid heightened domestic and global uncertainty, priorities are building further reserve buffers and advancing structural reforms to safeguard resilience to shocks and sustain strong, inclusive, and job-rich growth.