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

Central bank holds policy rate at 8%
On June 18, the National Bank of Georgia (NBG) opted to keep the refinancing rate unchanged at 8%, maintaining a cautious monetary stance amid global uncertainty. The decision follows continued price stability, with inflation standing at 3.5% in May—just slightly above the 3% target. Core inflation, which strips out volatile items such as food, energy, and tobacco, declined to 2%. Service sector inflation—a key signal of long-term expectations—was similarly low at 2.2%.
The NBG attributes recent inflationary pressure primarily to global food prices, with imported deflation from lower oil prices helping offset those increases. In its central forecast scenario, inflation is expected to average 3.8% in 2025 but should return to the 3% target in the medium term.
Preliminary data indicates an 8.8% YoY expansion of the Georgian economy over the first four months of 2025. Still, global risks persist. The NBG highlighted elevated geopolitical tensions—particularly in the Middle East—as a potential inflationary shock due to rising oil prices and deteriorating global supply chains. However, if trends such as a weaker U.S. dollar and falling global food prices continue, a low-inflation scenario may emerge, strengthening the case for a future rate cut.
For now, however, the NBG emphasized a wait-and-see approach. Future decisions will be based on updated macroeconomic projections, inflation expectations, and global developments. The next Monetary Policy Committee meeting is scheduled for July 30.

Remittances climb, Russian share falls
Remittances to Georgia totaled $317.4 million in May, up 11.6% YoY, driven by rising inflows from the European Union and the United States. Transfers from the U.S. grew 25.2% YoY, reaching $59.1 million, while EU countries accounted for 44% of total remittances. Italy, Germany, and Greece remained key sources.
Conversely, transfers from Russia fell 9.2% to $43.7 million. Outflows from Georgia also increased to $35.2 million in May, a 16.8% YoY rise.
Over the first five months of 2025, total remittance inflows reached $1.4 billion, underlining the continued importance of diaspora income in supporting household consumption and foreign exchange reserves.

NBG tightens foreign currency lending
In a move to further de-dollarize the banking system, the National Bank of Georgia (NBG) has announced that starting August 1, individuals earning in Georgian lari will be barred from taking foreign currency loans above GEL 750,000. The ceiling was last adjusted in January 2025, when it rose from GEL 500,000, continuing a gradual policy shift that began in 2024.
The change is part of a broader strategy to mitigate exchange rate risks for borrowers and reduce the country’s exposure to dollarization. Currently, 43% of Georgia’s loan portfolio is still denominated in foreign currency—a level the NBG considers high relative to regional peers.
According to Head of the NBG’s Financial Stability Department David Utiashvili, the adjustment is expected to convert around 1,000 loans—equivalent to roughly $150 million—into GEL. “These borrowers will be better protected from currency shocks,” Utiashvili noted, adding that further steps may follow if the pace of dollarization continues to stagnate.
Larization trends are showing slow but steady progress. As of April 2025, GEL-denominated loans accounted for 56.75% of the total credit portfolio. Meanwhile, 78% of new mortgage loans in April were issued in GEL, up from 77% a year earlier.

Georgian wines win 96 awards in Shanghai
Georgia’s centuries-old winemaking tradition continues to gain global acclaim. At the 2025 Shanghai International Wine Challenge (SIWC), Georgian wines took home 96 awards, including 10 Platinum, 44 Gold, and 35 Silver medals. The event featured 200 Georgian wines, and one of the five competition days was dedicated exclusively to Georgia.
Now in its 19th year, the SIWC is among the most influential wine competitions in Asia. Organized by the Shanghai Waigaoqiao Free Trade Zone, it provides a high-profile platform for producers to showcase their wines to industry experts, media, and importers. The blind-tasting format ensures objectivity, with a jury of 80 international wine professionals.
The strong performance of Georgian wines highlights the country’s growing footprint in China’s premium wine market.

Mortgage lending drops 15%
Georgia’s mortgage lending market experienced a notable slowdown in early 2025. From January through May, banks issued 19,313 new mortgage loans, down 15% compared to the same period in 2024. Despite the drop in volume, total loan value remained stable at GEL 1.65 billion, pointing to a shift toward larger loan sizes.
Indeed, the average mortgage size increased from GEL 72,000 to GEL 86,000, likely reflecting rising real estate prices and a preference for higher-value properties. The tightening of monetary conditions has played a key role: interest rates on GEL-denominated mortgages reached 13.1% in May 2025, up 1.46 points YoY.
To support the housing market, the NBG relaxed mortgage regulations in February. The minimum down payment requirement was reduced from 15% to 10%, giving more flexibility to prospective homebuyers. Still, analysts say high interest rates and cautious consumer sentiment may continue to weigh on demand in the short term.

World Bank: Georgia sees strong growth, rising unemployment
The World Bank’s June Economic Update painted a nuanced picture of Georgia’s economy. While real GDP grew a robust 8.8% YoY through April—fueled by gains in ICT, finance, transport, and mining—labor market conditions showed signs of softening.
The unemployment rate rose to 14.7% in Q1 2025, up from 14% the previous year. Labor force participation slipped to 54.8%, while the employment rate fell by 0.5 percentage points. Analysts suggest that while output is strong, job creation is lagging, particularly in construction and manufacturing, where activity has contracted.
FDI also showed signs of weakening. In Q1 2025, gross inflows declined 7.7% due to lower equity and debt financing. Reinvestment, which accounted for 83.6% of total FDI, helped offset the drop. Top investor countries included the Czech Republic, U.S., and Turkey.
On the fiscal front, April recorded a deficit equivalent to 0.3% of GDP. Revenues grew just 0.5% YoY, while capital expenditure dropped sharply by 20.2%. Public debt stood at 34.2% of GDP, with domestic borrowing rising 20% YoY.

Georgia’s energy exchange launch pushed to 2027
The government has postponed the full launch of Georgia’s electricity balancing and wholesale market until July 1, 2027. Originally slated for earlier implementation on July 1, 2025, the delay was formalized by a resolution adopted on June 26, which cited technical and regulatory bottlenecks as the primary causes.
Under the new timeline, the Georgian State Electrosystem must finalize the balancing market platform, registration systems, and accounting mechanisms. Meanwhile, the Commercial Operator of the Electric Power System (ESCO) will develop tools to manage public wholesale services and prepare for full-scale operations.
Sector representatives say that the postponement reflects a lack of readiness among market participants, particularly concerning hourly balancing obligations, which were cited as a significant technical and financial challenge for many companies. The delay, while not unexpected in industry circles, raises further questions about the pace of Georgia’s energy market liberalization, which has already been delayed multiple times.

Parliament advances foreign labor legislation
Georgia’s ruling party has introduced a bill to overhaul the country’s foreign labor policy. The proposed law, currently under expedited review in parliament, aims to introduce a special work permit system for foreign nationals and impose stricter penalties on unauthorized employment.
According to official data, around 239,000 foreign nationals stayed in Georgia for at least six months between 2022 and 2023. Yet only 42,000 were formally registered in the labor market, indicating widespread informal employment.
The proposed reforms would:
– Require work permits and residence permits for all foreign labor migrants.
– Set clear criteria for issuing work rights.
– Regulate self-employed foreigners and entrepreneurs.
– Assign oversight responsibilities to specific agencies.
– Impose fines of GEL 2,000 per violation, with higher penalties for repeat offenders.
If adopted, the law will take effect on March 1, 2026. Existing foreign workers will have until January 1, 2027, to comply with the new requirements. Lawmakers say the changes are necessary to protect the domestic labor market and ensure better oversight of migration flows.

External trade up 13.3%
Georgia’s external merchandise trade reached $9.79 billion between January and May 2025, a 13.3% YoY increase, according to Geostat. Exports totaled $2.59 billion (+14.6%), while imports rose to $7.19 billion (+12.8%). The resulting trade deficit stood at $4.6 billion, or 47% of total turnover.
Motor vehicles continued to dominate both exports and imports. Exported vehicles totaled $974.7 million—37.6% of total exports. Other key exports included precious metal ores ($136.5 million) and alcoholic beverages ($98.4 million). Top export destinations were Kyrgyzstan, Kazakhstan, and Azerbaijan.
On the import side, motor cars accounted for $1.3 billion (18% of imports), followed by petroleum ($494.6 million) and artwork ($481.2 million). The largest import partners were the U.S. ($1.1 billion), Türkiye ($1.07 billion), and Russia ($808.6 million).