China is the largest bilateral creditor to low- and middle-income countries (LMICs) presently. China’s lending mainly targets infrastructure, transport, energy, and mining sectors in developing countries that are of strategic importance to the Chinese government. Sub-Saharan Africa and South Asia have observed the most substantial increases in borrowing. Chinese financing to LMICs is facilitated through state entities, offering concessional and non-concessional loans, with a significant portion of lending cloaked in confidentiality.

According to GeoStat’s preliminary estimates in the first quarter of 2024, Georgia’s nominal GDP reached GEL 18,913.2 million, with a year-over-year real GDP growth of 8.4% and a GDP deflator change of 3.1%. The growth was driven by significant increases in value-added across various sectors: Real estate activities rose by 18.8%, Education by 29.1%, Public administration and defence, including social security, by 13.0%, Construction by 10.3%, Information and communication by 12.2%, and Transportation and storage by 9.7%.

The recent amendment to Georgia’s tax code, known as the “offshores law,” has sparked significant concern regarding the integrity of Georgia’s financial system. This policy brief examines the implications of this amendment in the context of Georgia’s recent political and regulatory developments, which have raised alarms about the potential risks of money laundering and sanctions evasion.

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.

The global recovery from both the COVID-19 pandemic and Russia's invasion of Ukraine is progressing slowly and unevenly. While there was initial economic resilience earlier in the year, marked by a rebound in reopening and efforts to reduce inflation, it is premature to feel reassured. Economic activity has yet to fully return to pre-pandemic levels, particularly in emerging markets and developing economies, and regional disparities are widening.