Georgia's boom meets a cautious 2027 budget and tighter credit rules

Georgia's economy keeps posting numbers that most of its neighbours would envy. Geostat's rapid estimate, released on 30 September, put real growth at 6.3% year on year in August and 7.6% on average for January–August. In the same week the Finance Ministry sent parliament a 2027 budget built on growth of 5%, and the National Bank of Georgia (NBG) announced tighter rules on household borrowing. Read together, the three documents show a government and a central bank that expect the pace to slow and are preparing for it.

Where the growth is coming from

According to Geostat, August growth was driven mainly by manufacturing, information and communication, finance and insurance, real estate, trade, and transport and storage; construction declined. The second quarter grew 6.9%. The European Bank for Reconstruction and Development raised its 2026 forecast to 6.5% and its 2027 forecast to 5.5%, each up 0.5 percentage points from June. The EBRD describes first-half growth as broad-based but notes that tourism income fell 2.0% year on year.

Trade is the most visible driver. Exports rose 22.1% to $5.423bn in January–August, while imports rose 3.4% to $12.504bn, Civil Georgia reports from Geostat data. The composition is narrow:

• Motor cars were the largest export at $1.347bn, or 24.9% of the total, and also the largest import at $2.364bn.
• Petroleum and petroleum oils were second at $688.9m; exports to Togo, almost all of them oil products, reached $137m from close to zero a year earlier.
• Exports to Iran rose 746.8% to $162m, of which cars accounted for $129m (7,360 units).
• Kyrgyzstan was the largest export market at $577.6m, ahead of China at $543.7m and Russia at $500.6m.

The Economy Ministry stresses that domestic exports, excluding re-exports, rose 63.5% to $3.3bn. Even so, a large part of the trade growth comes from moving cars and fuel to a small number of markets. Trade of that kind can shift quickly with regulatory or enforcement decisions taken outside Georgia, and it adds less domestic value than the headline export figure suggests.

The forecasters do not agree on how long the pace lasts. Civil Georgia notes that the IMF projects 6.5% growth in 2026 and expects inflation to stay above the NBG's target until mid-2027. The World Bank's June forecast was lower, at 5% for 2026 and 5.5% for 2027, after a downgrade of 0.5 percentage points; the UN's World Economic Situation and Prospects puts 2026 at 5.4%. The government's own 5% assumption for 2027 sits at the cautious end of that range.

Reserves up, Russian remittances down

The external position has strengthened. The NBG bought a net $555.6m of foreign currency in August and $3.12bn in January–August, lifting international reserves to $8.14bn, which its president, Natia Turnava, called an "all-time high". Money transfers into Georgia rose 8.2% year on year in August to $295.17m, with the EU and the US accounting for 72.5%.

Transfers from Russia have collapsed. They fell 87.7% year on year in August to $5.07m, and Russia dropped to 11th place among source countries, Civil Georgia reports from NBG data; in June they had been $51.42m. The fall follows the Russian transfer system Zolotaya Korona's halt of transfers to Georgia in July after EU sanctions. Remittances overall equalled 11.2% of GDP in 2025, according to the World Bank.

A budget that assumes a slowdown

The draft 2027 consolidated budget, whose key parameters the Finance Ministry released this week, is set at GEL 37.531bn, GEL 1.526bn above the 2026 forecast. It assumes real growth of 5% in 2027 and 5.2–5.3% in later years, a budget deficit of 2.5% of GDP, a current account deficit of 4.5% and government debt of 31.6% of GDP. Inflation is expected to fall to the NBG's 3% target by the end of 2027. Spending rises on pensions (GEL 555m), education (GEL 400m) and an 8.4% increase in public-sector base salaries. Capital spending is planned at more than GEL 8.431bn, including GEL 125m for Anaklia port and GEL 250m for Georgian Railway capacity.

Borrowing shifts towards the domestic market. The government plans GEL 4.67bn of new loans, of which GEL 2.6bn domestic and GEL 2.07bn external, Georgia Today reports, citing BM.GE. External borrowing is GEL 1.2bn lower than in 2026, when the government issued a $500m Eurobond. The Asian Development Bank (GEL 460.67m), the World Bank (GEL 381.10m) and the European Investment Bank (GEL 287.42m) are the largest planned external lenders. The single largest project is GEL 250m for 45 new locomotives and 10 passenger trains, co-financed by the World Bank, ADB and AIIB.

The central bank leans on credit, not rates

The NBG kept its refinancing rate at 8.25% on 9 September and expects inflation to average 5.2% this year; annual inflation was 5.6% in August, driven by transport (15.2%) and housing and utilities (8.5%). The bank attributes the overshoot to supply shocks, including energy prices driven by tensions in the Middle East, and put core inflation at 3.6%. Its high-inflation scenario, in which a prolonged shock feeds into expectations, would require a tighter monetary stance. Instead of raising rates, it has moved on household lending. On 30 September its Financial Stability Committee said the 25% payment-to-income cap, which now applies to borrowers earning under GEL 1,500 a month, will cover those earning under GEL 2,000 from 1 February 2027 and under GEL 2,500 from 1 September 2027. The bank said the thresholds had not kept pace with wage growth and that the change is meant to curb "over-indebtedness risks".

The step is technical but telling. By widening the group of borrowers who face the strict cap, the NBG is cooling credit-financed consumption without tightening policy for the whole economy. Combined with a budget that assumes slower growth and more domestic borrowing, it suggests Tbilisi is planning for a year in which the trade windfall fades. The figures to watch are monthly exports to Iran and Kyrgyzstan, the September inflation print, and whether parliament changes the 5% growth assumption before the budget is adopted.

Sources

• Civil Georgia — Georgia's GDP Up by 6.3% in August 2026
• Civil Georgia — Georgia Tightens Credit Rules by Raising Income Threshold for 25% Payment-to-Income Rule
• Georgia Today — Georgia's 2027 consolidated budget set at GEL 37.5 billion, Finance Ministry says
• Georgia Today — Government plans to take ₾2 billion in new external debt in 2027
• Georgia Today — EBRD raises Georgia's 2026 economic growth forecast to 6.5%
• Civil Georgia — Georgia's Foreign Trade Up 8.4% in January-August as Exports to Iran, Togo Spike
• Civil Georgia — NBG Reports USD 555.6 Million Net Purchases in August as Reserves Reach 'All-Time High' USD 8.14 Billion
• Civil Georgia — EU, U.S. Remain Top Sources of Money Transfers in August as Russia Drops to 11th Place
• Civil Georgia — NBG Keeps Refinancing Rate Unchanged at 8.25%, Expects 5.2% Inflation in 2026
• Civil Georgia — Georgia's Annual Inflation at 5.6% in August 2026