Investment News

Investor.ge provides a brief update on investments and changes in government policy that could impact the business environment. Information in this issue was taken from BM.ge

EBRD raises Georgia growth outlook as ICT remains key driver

The European Bank for Reconstruction and Development (EBRD) has raised its growth forecasts for Georgia, projecting real GDP growth of 6.5% in 2026 and 5.5% in 2027—both 0.5 percentage points higher than its June forecasts.

Georgia’s economy expanded by 7.8% in real terms during the first half of 2026. According to TBC Capital, information and communications technology remained the largest contributor, accounting for almost 29% of real GDP growth, while the combined contribution of trade and transport increased by around 1.2 percentage points. The contribution from real estate, meanwhile, more than halved compared with the first half of 2025.

The EBRD similarly highlighted ICT, manufacturing, transport and warehousing, and financial and insurance services as important growth drivers. It also pointed to large planned investments in real estate, connectivity, and renewable energy as potential sources of further growth. However, the bank identified tensions with the EU and the impact of conflict in the Middle East on tourism revenues and energy costs among the downside risks.

Export growth accelerates despite decline in car re-exports

Georgia’s foreign trade turnover increased 8.3% year-on-year to $17.9 billion in January-August, supported by particularly strong export growth. Exports rose 22.1% to $5.42 billion, while imports increased a more modest 3.3% to $12.49 billion, leaving a trade deficit of approximately $7.07 billion.

The composition of exports also shifted markedly. Passenger cars remained Georgia’s largest export category at $1.35 billion, despite falling 22% year-on-year. That decline was more than offset by sharp growth elsewhere: exports of petroleum and petroleum products jumped from $59 million to $689 million, while precious-metal ores and concentrates increased 69% to $403 million. Ferroalloy exports rose 60%, and copper ores and concentrates more than tripled.

On the import side, passenger cars remained the largest category at $2.36 billion, despite declining 12.5%. Petroleum and petroleum products rose 37.4% to $1.17 billion, while imports of natural gas increased nearly 20%. Turkey remained Georgia’s largest import source, followed by Russia, the United States, and China.

Inflation rises, but expectations ease as NBG holds rates

Annual inflation reached 5.6% in August, up slightly from 5.5% in July and remaining well above the National Bank of Georgia’s (NBG) 3% target. Higher transport costs—particularly fuel prices—were the largest contributor, alongside rising food, utility, and healthcare costs.

Against that backdrop, the NBG kept its refinancing rate unchanged at 8.25% in September. The central bank said much of the inflation overshoot continued to reflect supply-side pressures, particularly higher energy prices. Core inflation stood at a lower 3.6%, however, suggesting that the price shock had not yet spread as strongly across the broader economy.

There was also some positive news on expectations. The NBG’s August survey of economic participants found that both one-year and three-year inflation expectations had declined compared with July. Expectations for wage growth also eased. The combination leaves the central bank balancing above-target headline inflation against signs that longer-term price expectations remain comparatively contained.

Georgia’s capital markets gain international visibility

Georgia’s capital markets received a potentially significant boost in September after J.P. Morgan included GEL-denominated government securities in its new GBI-EM Edge index for frontier-market local-currency government bonds.

The $328 billion index covers 425 instruments across 26 countries and 24 currencies, with Georgia receiving a 1.79% weighting. Inclusion places Georgian government securities within an international benchmark used by institutional investors and asset managers and could increase foreign demand for GEL-denominated debt. J.P. Morgan estimates the bonds represented in the index offer an average nominal yield of around 10.4%.

The development comes as Georgia’s wider bond market continues to deepen. The NBG reports that the domestic non-government bond market expanded from just GEL 106 million in 2014 to GEL 6.4 billion in 2025. As of Q2 2026, publicly issued corporate and international financial institution bonds accounted for 97% of the market.

Georgia also hosted the 2026 GMAP Market Development Forum in September, organized by the NBG and Georgian Financial Markets Treasuries Association in partnership with Nasdaq. The newly presented GMAP concept aims to expand access to hedging and risk-management instruments while improving the liquidity and international accessibility of Georgian securities markets.

Mixed signals for Georgia’s agricultural exporters

Georgia’s nut sector enters the 2026 harvest season with contrasting signals. The Ministry of Environmental Protection and Agriculture reports that nut exports reached $188.5 million during the 2025/26 marketing year, with 18,500 tons of hazelnuts exported. Around 12,500 tons went to EU markets, including Italy, Spain, Germany, and France.

The outlook for the current harvest is considerably weaker. Hazelnut Producers Association executive board chairman Merab Chitanava expects production to fall below 40,000 tons, compared with an earlier forecast of more than 45,000 tons. Heavy rainfall, delayed harvesting, pest damage, and deteriorating quality have weighed on output, while higher labor costs are making harvesting uneconomical for some smaller farmers.

The government is also changing its approach to the apple sector. After more than a decade, it has ended subsidies for the purchase of non-standard apples used by concentrate producers. The Agriculture Ministry argues that continued subsidies could encourage lower-quality production and says support will instead focus on modern, higher-productivity orchards. Under a new co-financing program introduced in July, the state can cover 50% of eligible costs for establishing modern orchards.

China leads FDI as energy investment drops sharply

China emerged as Georgia’s largest source of foreign direct investment during the first half of 2026, with Chinese FDI reaching $236 million. The figure represents a sharp turnaround from the same period of 2025, when net Chinese investment was negative $29 million.

Overall FDI, however, moved in the opposite direction. Georgia attracted approximately $750 million during the first two quarters, down $211 million, or 22%, year-on-year. The United Kingdom was the second-largest source at $176 million, followed by Malta at $63 million, the United States at $58 million and the UAE at $52 million. The figures point to a significant change in the geographical composition of investment even as total inflows weakened.

Energy was among the sectors recording a particularly sharp decline. FDI in Georgia’s energy sector totaled $41.2 million in the first half of 2026, down 66.9% year-on-year. Investment fell from $31.9 million in the first quarter to just $9.3 million in the second. The Netherlands was the largest disclosed source, contributing $17.7 million, followed by Turkey with around $6 million.

Tbilisi housing sales and mortgage lending surge

Activity in Tbilisi’s residential property market accelerated in August, with 3,388 apartment transactions—an 18.9% increase compared with August 2025. The total value of the market grew even faster, rising 35.2% to $297 million.

According to Colliers, new developments were the main driver. Transactions in new projects increased 23.7%, with much of that growth concentrated in Samgori and Didi Dighomi. Sales in older projects increased by a more modest 3.8%.

Foreign buyers also became more prominent. Their share of total residential transactions increased to 14% in August from 12% in July, although Georgian citizens continued to account for the large majority of purchases in both new and older developments.

The stronger property market has coincided with record mortgage lending. Georgian commercial banks issued GEL 3.58 billion in new mortgages during January-July, up 46.5% in value year-on-year. A total of 34,482 mortgages were issued, an increase of 20.7%. The average new mortgage reached GEL 103,900, reflecting both rising property prices and a reduction in minimum down-payment requirements from 15% to 10%.

Borrowing costs have meanwhile eased. The average interest rate on new GEL-denominated mortgages stood at 11.38% in July, 1.71 percentage points lower than a year earlier.

Georgia and Singapore launch fintech fellowship initiative

Georgia’s growing fintech ambitions received a further boost in September with the announcement of a new Georgia-Singapore fellowship initiative aimed at developing future financial technology leaders.

Tether, Pave Bank, and the Global Finance & Technology Network (GFTN) signed a memorandum of understanding on the creation of the program. The initiative is intended to strengthen links between the fintech ecosystems of Georgia and Singapore and develop talent and knowledge exchange between the two markets.

The agreement adds a human-capital component to Georgia’s broader efforts to develop its financial technology sector, alongside recent initiatives aimed at strengthening digital finance and the country’s international financial-market connections.

Bank deposits climb above GEL 75 billion

Deposits in Georgia’s banking system reached GEL 75.67 billion at the end of August, increasing by GEL 1.69 billion during the month. Excluding exchange-rate effects, deposits were up 21.7% year-on-year—considerably faster than the 14.8% annual increase in lending.

The figures indicate that financial resources are currently accumulating in the banking system faster than they are being extended as credit. Deposit larization stood at 56.8%, while the average weighted interest rate on term deposits was 6.78%. GEL-denominated deposits offered a considerably higher average rate of 8.68%, compared with 2.31% for foreign-currency deposits.

Insurance premiums rise 16% in first half

Georgia’s insurance sector collected GEL 930 million in premiums during the first half of 2026, up 16% year-on-year, while claims paid increased from GEL 363 million to GEL 429 million.

TBC Insurance and Imedi L jointly led the market by premiums, each collecting GEL 151 million, followed by Aldagi with GEL 136 million and GPI Holding with GEL 135 million. Imedi L recorded particularly rapid growth, with premiums up 84% year-on-year.

Across the sector, insurance profit reached GEL 189 million and net profit GEL 64 million. Total assets increased to GEL 1.87 billion, while sector capital reached GEL 525 million. Nineteen insurers were operating in Georgia as of the end of June.

Public procurement rules are changing

Changes to Georgia’s public procurement system have introduced electronic catalogues, framework agreements, and new rules allowing bidders to combine their own experience with that of subcontractors when meeting tender qualification requirements.

The latter could widen access to public contracts for companies that previously lacked the required track record independently. For example, a bidder facing a GEL 5 million experience requirement could now satisfy it through GEL 2 million of its own qualifying experience and GEL 3 million from a subcontractor.

Construction procurement is also shifting toward more explicit quality requirements. Procuring bodies must define technical and material standards in advance, with price determining the winner only among bids that satisfy those requirements. Framework agreements can meanwhile cover periods of three to four years or longer and may include multiple successful suppliers.

U.S. court confirms ENKA arbitration award against Georgia

A U.S. federal court has confirmed an international arbitration award requiring Georgia to pay more than $400 million to Turkish construction company ENKA following the collapse of the Namakhvani hydropower project. The underlying International Chamber of Commerce arbitration award, issued in December 2024, required Georgia to pay approximately $383 million. Interest accruing at SOFR plus four percentage points has since pushed the total liability above $400 million.

The September ruling by the U.S. District Court for the District of Columbia adds another enforcement jurisdiction for the award. Georgia has separately sought to challenge or suspend the compensation through proceedings in France.