In 2022 Georgia stayed on the path of recovery, exceeding experts’ expectations of economic performance. According to GeoStat’s preliminary estimates, the real GDP continues to show double-digit growth rates, measuring at 10.1% y/y in 2022 – which is remarkably close to the NBG’s real GDP growth expectation of 10% from October 2022. ISET-PI’s real GDP growth forecast from October data came close to the reported actual (11% y/y) albeit slightly overestimating the final yearly results. A series of real shocks (Russia’s war on Ukraine, international sanctions against Russia, large-scale migration from Russia to Georgia, and the accompanying inflows of funds) were the main economic drivers in 2022. A surge in exports, FDI, and capital investment activity resulted in the second consecutive year with a larger than 10% real GDP growth rate.
The GDP expansion process was accompanied by rising inflation. While inflation moderately decreased in the fourth quarter of 2022, reaching 9.8% y/y in December, the yearly inflation remained at double-digit levels, measuring 11.9%. Although imported inflation has been declining, accompanied by the strengthening currency, the high domestic demand still plays a major role in the rising inflation. According to the National Bank of Georgia’s forecasts (February 2023), the average inflation in 2023 will be 5.4%. Moreover, starting from the third quarter, it will be getting closer to the target of 3%.