Despite steady economic growth, the share of Georgia’s shadow economy has shown little change in recent years, remaining around 13%, according to Gogita Todradze, Head of the National Statistics Office (Geostat).
Speaking on TV program Analytics, Todradze noted that in 2023, the unobserved economy accounted for 12.4% of the country’s GDP, while in the following year, it rose slightly by 0.5 percentage points.
“If we look at the recent period, it is around 13% and there has been no sharp change in this direction. On the contrary, in 2023 the share of the unobserved economy was 12.4%, and in 2024 it increased slightly, by 0.5 percentage points,” he said.
When asked why the share of the shadow economy does not decline in parallel with Georgia’s overall economic expansion, Todradze explained that certain high-activity sectors—particularly hotels and restaurants, continue to rely heavily on unregistered or informal transactions.
“In those service sectors where there is relatively high activity and turnover, the scale of the unobserved economy is also high. If turnover increases in these sectors, the unobserved economy tends to rise in parallel,” he stated.
According to Geostat’s data, while the overall share of the shadow economy averages 12.9%, in the hotel and restaurant sector it can reach around 50%, far exceeding the national average.
Todradze also emphasized the role of digitalization in curbing informal activity. Sectors that rely more on digital technologies, such as finance, insurance, and energy, demonstrate significantly lower levels of unobserved economic activity.
“Where there are more digital technologies, there is less of the unobserved economy,” he noted, adding that greater use of digital systems in transactions and reporting helps reduce opportunities for off-the-books operations.
Despite recent improvements in transparency and regulation, Todradze’s comments highlight a persistent challenge for Georgia: ensuring that economic growth is accompanied by a reduction in shadow activity, particularly in cash-driven service industries.
