Macro Update – Georgia

Revisited: Is the Georgian Economy Largely Delta-Neutral?

A Rare Feature Well-Known for Uzbekistan
 

• Two weeks ago, we raised our growth forecast. With data continuing to come in above expectations, we are raising it again – to 7.4% for the full year;
   
• Similar to Uzbekistan, we have long highlighted features of structural stability in the Georgian economy, which we refer to as “delta-neutral”, reflecting the presence of offsetting channels across many, though not all, scenarios;
   
• Downside spillovers from the Middle East conflict have been relatively contained, concentrated in the hospitality sector, while upsides have grown more pronounced – chief among them, commodity exports lifted by surging global prices;
   
• Though Georgia is a net oil importer, the country receives substantial inflows from commodity exporters, often broadly offsetting net oil exposure, with oil re-exports also emerging since late 2025;
   
• Exports have likely been the single largest driver of growth, unlike in 2025, since coincident indicators point to no significant acceleration in spending as of April;
   
• Rising exports have more than offset the decline in tourism revenues in March-April, by our estimates, supporting the GEL and potentially allowing the NBG to resume FX purchases;
   
• All in all, the three core drivers behind the upward revision – delayed war resolution in Ukraine, Middle East spillovers, and stronger-than-expected Geostat prints – remain unchanged, though larger in magnitude;
   
• We also revise the end-year inflation forecast from 5.6% to 6%, following an April print of 5.9% that came in slightly above our forecast, and given that oil prices have risen again after moderating in mid-April.