Weekly Market Watch

Georgia’s economy grew by 8.8% y/y in Feb-26
Georgia’s economy increased by 8.8% y/y in Feb-26, following 7.9% y/y growth in previous month. Overall, Georgia’s economy grew by 8.4% y/y in 2M26. February’s growth was mainly driven by strong activity in ICT, transport & storage, financial & insurance, manufacturing and mining, while construction and energy sectors contracted.
We maintain our 2026 real GDP growth forecast at 6.0%, supported by stronger-than-expected growth in 2M26. While the Iran escalation may create some headwinds in the near term, we expect demand to normalize in 2H26, keeping the full-year figure on track (see latest macro forecasts here).

Annual inflation eased to 4.3% in Mar-26
In March 2026, Georgia’s annual inflation eased to 4.3% from 4.6% posted in previous month, largely due to the last year’ high base effect. The moderation was mainly driven by a slowdown in domestic and mixed goods inflation to 6.0% y/y (from 6.5% y/y in Feb-26) and 4.9% y/y (from 6.2% y/y in Feb-26), separately. Meanwhile, imported goods prices increased by 0.5% y/y in March, following a -0.7% y/y decline in previous month. Notably, core inflation - excluding food, energy, and tobacco - remained unchanged at 2.4% y/y in Mar-26.
We have revised our average annual inflation forecast upward to 4.2% for 2026 (from an initial 3.0%), reflecting renewed cost pressures from higher global oil prices amid the Iran escalation, alongside increased electricity tariffs in Georgia (estimated to add an additional 0.7ppts to annual inflation from Apr-26 onward).

CA deficit narrowed to a record-low 2.6% of GDP in 2025
CA deficit narrowed to a record-low 2.6% of GDP in 2025, from a 5.3% posted in 2024. This improvement was driven by a strong services surplus (+21.2% y/y) - with ICT exports surging 53.4% y/y to US$ 1.3bn and tourism rising 6.0% y/y to US$ 4.7bn - alongside a 5.6% y/y increase to US$ 3.6bn in the transfers balance. Meanwhile, the goods trade deficit widened modestly by 4.4% y/y to US$ 6.9bn, as goods exports increased by 11.5% y/y and goods imports were up by 8.4% y/y. Net FDI of US$ 1.4bn (+21.8% y/y) covered the CA deficit 1.4x over in 2025. Notably, excluding reinvested earnings (recorded in both CA and its funding categories), Georgia posted a CA surplus of 1.0% in 2025 (a sharp swing from -1.4% of GDP in 2024).
We forecast CA deficit at 3.2% of GDP in 2026.