Quarter 4, 2023 Macro Review | Georgia's economic resurgence: GDP growth exceeds forecasts amid global slowdown
01 April 2024

Similar to the year 2022, Georgia stayed on the path of economic recovery from COVID-19 in 2023 as well. According to GeoStat’s preliminary estimates, the real GDP continues to show a relatively high growth rate, measuring at 7.5% y/y in 2023 – which is remarkably higher than the NBG’s real GDP growth expectation of 6% from October 2023. In 2023, the global economy faced a slow-paced recovery due to high inflationary pressures and a tight financial environment, exacerbated by a challenging geopolitical situation. However, in Georgia, despite a slowdown in goods exports due to weak external demand in the fourth quarter, the economy remained robust. This was largely due to solid growth in travel revenues and strong domestic demand.

The Lari exchange rate strengthened, and as a result, the current account deficit deepened only slightly. Headline inflation remained low, thanks to the relative stability of international commodity prices and the maintenance of a tight monetary policy. Inflation in Georgia saw a significant decrease in 2023, reaching 0.4% by the end of the year. This decline was primarily due to the import component of inflation. Despite the tight monetary policy, robust aggregate demand exerted an opposing influence on domestic prices.

According to the baseline scenario, excess demand is expected to fully normalize throughout 2024, accompanied by only a gradual reduction in the monetary policy rate. This is anticipated to contribute to the stabilization of inflation around its target rate in the medium term (NBG, January 2024).