WB Published Monthly Economic Update For Georgia for July. According to the document, in May, real GDP growth reached 7.5 percent (yoy), and cumulative growth remained at 8.8 percent, like April. Growth in May was sustained by ICT, manufacturing, trade, transportation and storage, and construction, although there was a decline in the energy sector. In Q1 2025, GDP increased 9.8 percent (yoy), compared with 8.7 percent in Q1 2024, driven by trade (up 6.1 percent, yoy), real estate (up 12.9 percent, yoy), and ICT(up 28.6 percent, yoy). The VAT turnover grew by 13 percent (nominal, yoy), up from 9.4 percent (yoy) in April. Business registrations grew by 1.6 percent (yoy) in May, after a 14.3 percent(yoy)fall in April.
Average monthly earnings grew 11.7 percent (yoy) in nominal terms and 7.9 percent (yoy) in real terms in Q1 2025. Financial sector and ICT wages rose 22 percent and 5.2 percent, respectively (yoy). While women earnings rose 13.3 percent (yoy), compared with 11 percent (yoy)for men, they still learn less than men.
Consumer prices stabilized in June. Prices fell 0.01 percent (mom), while the annual inflation rate reached 4 percent, exceeding the 3 percent target of Georgia’s National Bank (NBG). In June, there was deflation in food (mainly vegetables) and non-alcoholic beverages (0.4 percent, mom), clothing and footwear (1.4 percent, mom), and transport(0.6 percent, mom). This was partly offset by price increases in alcoholic beverages (up 2.2 percent, mom) and health services (up 0.5 percent, mom). Core inflation rose slightly,to2.4 percent (yoy). At its June 18 meeting, the NBG maintained the 8 percent policy rate, in place since May 2024. In May 2025, the producer price index (PPI)for industrial products fell 0.5 percent(mom), although it grew 4.9 percent(yoy).
The trade deficit in goods fell in May. Exports expanded 15.7 percent (yoy), driven by robust increases in the exports of motor vehicles (up 35.4 percent, yoy), precious metal ores and concentrates (up 47.2 percent, yoy), and wine (up 83 percent, yoy). Imports fell 5.1 percent, due to a 25.4 percent (yoy) drop in motor vehicles, although petroleum and pharmaceutical imports grew 7.4 and 15.2 percent, respectively. This resulted in the trade deficit falling 16.5 percent (yoy) in May. Cumulatively, exports grew 14.6 percent (yoy) during January-May 2025, with domestic exports constituting 45.1 percent of the total and growing by 6.1 percent (yoy). Over the same period, imports grew 12.8 percent (yoy). Both were led by trade in motor vehicles, with Kyrgyzstan, Kazakhstan and Azerbaijan the top trading partners.
The GEL continued to appreciate vis-à-vis the USD, while depreciating respect to the EUR and the RUB. Depreciation of the real effective exchange rate (REER) continued in May, down 6 percent (yoy). Gross international reserves rose 2.3 percent (mom). At endJune, reserves were 2.3 percent (yoy) higher than at endJune 2024, and equivalent to 3.2 import months. Remittance inflows soared 7.4 percent (mom) and 11.6 percent (yoy); inflows from Europe and the United States compensated a decline in those from Russia. Revenue from visitors grew 2.3 percent (yoy) in Q1 2025, compared with 1.5 percent (yoy) growth in Q1 2024.
Financial sector indicators remain sound. Private sector credit expanded 15.1 percent (yoy), excluding exchange rate effects. GEL-denominated lending rose 20.5 percent, driven slightly more by household loans than business loans. The loan dollarization ratio stabilized at 43 percent. Deposits grew 11.9 percent (yoy), with the deposit dollarization rate stable at 51 percent. Compared with April, non-performing loans (NPLs) stabilized at 1.6 percent, and there were marginal increases in return on assets (up from 3.67 to 3.73) and return on equity (up from 21.69 to 21.97).
A fiscal deficit equivalent to 0.3 percent of GDP was recorded in May. Revenue shot up in May, increasing 40.2 percent (yoy), compared with 0.5 percent (yoy) growth in April. This was driven by a 7 percent (yoy) rise in tax collection (double-digit growth in both personal income tax and excise tax, and 5.6 percent, yoy, growth in VAT). Other receipts also grew 6-fold in May, due to a GEL 670 million profit transfer by the NBG, which was significantly higher than the GEL 303 million profit transfer by the NBG in 2024. Total expenditure increased 2.1 percent (yoy), following a 2.6 percent (yoy) fall in April, with current expenditure rising 10.3 percent (yoy) and capital expenditure falling 27.8 percent (yoy). Public debt fell slightly to 33.6 percent of GDP in May, down from 34.2 percent of GDP in April. Domestic debt rose 19.7 percent (yoy), and external debt grew a modest 0.9 percent (yoy). During January-May, the fiscal deficit stood at just 0.02 percent of GDP, down from 0.25 percent over January-May 2024.
