or the past two years, Georgia has faced persistent political instability, driven by various legislative and electoral actions of the ruling party, ultimately resulting in a profound political crisis that has undermined the domestic and international legitimacy of the ruling party.

This note provides an overview of recent developments regarding Georgia’s foreign exchange Gross International Reserves (GIR), offers insights into some aspects of reserve adequacy, and central bank’s safeguards principles in the context of heightened political uncertainties. It appears that the GIR are likely inadequate to withstand prolonged political uncertainties. Furthermore, the National Bank of Georgia's (NBG) governance and regulatory frameworks are not presently equipped to counter these challenges.

The political and social turmoil surrounding the 26 October parliamentary elections and their aftermath have significant implications for Georgia's business environment. The prolonged polarization, government-led violence against protesters, and the suspension of EU accession talks create uncertainty that can negatively influence the economic climate in multiple ways.

GeoStat has published its preliminary estimate of real GDP growth for September 2024, which stands at 8.3%. In addition, the estimated growth for the first, second, and third quarters of 2024 reached 8.4%, 9.6%, and 11.1%, respectively. Consequently, the average real GDP growth from January to September 2024 reached 9.8%.

Due to a recent update in Geostat's GDP calculation methodology in December, revised growth rates show an upward trend compared to the previous month's figures. Consequently, our forecast for GDP growth has been adjusted upwards to reflect this change.