Is Georgia's economic growth sustainable?

Georgian economic growth

According to the European Bank for Reconstruction and Development (EBRD) Regional Director for the Caucasus, Katharina Bjorlin Hansen, the sustainability of Georgia’s current double-digit economic growth is debatable given the unstable situation in the region.

Bjorlin Hansen, in conversation with Business Formula, said that high economic growth is due to several factors, including migration, increased shipments and exports. However, given the unstable situation in the region, it is difficult to predict growth rates in the future.

According to the senior EBRD official, the unexpected 10% economic growth in Georgia today is impressive, and Georgia will grow by 5% next year. “However, due to the existing uncertainty, it is impossible to make accurate calculations.”

“There are several main factors that lead to the current growth of the Georgian economy — one is a growing influx of migrants, the other is increased traffic on the Georgian transport corridor. In addition, Georgia is an open economy and exports have increased. It is important that Georgia quickly improve its infrastructure and logistics in order to get the most out of increased cargo traffic, as well as improve the country’s energy security,” Bjorlin Hansen said.

In January-September of this year the Georgian economy grew by 10.2%. According to the National Bank, economic growth this year will be 10%, to which a significant contribution will be made by an increase in tourism income due to migration.

According to one of the senior representatives of the Asian Development Bank (ADB), Liaziza Sabirova, the influx of migrants had a positive impact on the Georgian economy, although this is a one-time effect.

Despite the rapid dynamics of economic growth, food prices in Georgia are rising. Manufacturers attribute the increase in prices to Russia’s invasion of Ukraine, complex logistics from Russia, and an increase in prices for products and raw materials on the world market.

According to the research organization PMCG, the total number of people who emigrated from Georgia increased by 7% from 2010 to 2020 and amounted to 861,000 people, which is 23% of the country’s population.

Georgian economic growth