An International Monetary Fund (IMF) mission led by Alejandro Hajdenberg concluded its visit to Tbilisi on April 7, describing Georgia’s economic performance as “robust,” while warning that the outlook has become “more challenging” amid rising “global uncertainty,” including the war in the Middle East.
The visit came as part of the IMF’s regular, typically annual “Article IV” consultations, at the end of which the mission staff issues a “concluding statement” with preliminary findings on the country’s economic performance and outlook.
Assuming the conflict is “short-lived,” Hajdenberg said that economic growth is expected “to remain strong, albeit moderating,” noting that despite heightened geopolitical risk, including possibly protracted war in the Middle East, Georgia is well-positioned “to absorb external shocks,” the mission chief said.
The concluding statement also underlined that sustaining economic growth in Georgia will require “addressing persistent constraints,” including high unemployment, especially among youth, which it said is “driven by skill mismatches and weak work incentives amid low wages.”
It warned that challenges in relations with the EU “could dampen investor sentiment and foreign direct investment,” while also noting that the planned USD 6.6 billion real-estate project by Abu Dhabi-based Eagle Hills “represents a significant upside to growth and employment.”
Mission Chief’s Statement
“Georgia’s economic performance has been robust, supported by sound macroeconomic management and policies,” Alejandro Hajdenberg, Mission Chief of the IMF in Georgia, was cited in the press release. “At the same time, amid rising global uncertainty, notably from the war in the Middle East, the outlook is becoming more challenging.”
He noted that, if the conflict noted is “short-lived,” economic growth is expected to “remain strong, albeit moderating, extending the solid performance observed in recent years.” At the same time, he noted that “headline inflation has risen above target due to higher food and energy prices, while core inflation remains contained.”
Hajdenberg also highlighted improvements in external and fiscal indicators, stating that “the external position has strengthened, with the current account deficit narrowing and gross international reserves reaching historic highs,” while “fiscal policy continues to be disciplined, with public debt at a low level.”
He said that despite the outlook being “clouded by heightened geopolitical risks,” including due to “a possibly protracted war in the Middle East,” Georgia is “well positioned to absorb external shocks, supported by strong macroeconomic fundamentals and policy buffers.”
“Looking ahead, policies should focus on preserving macro-financial stability and hard-won credibility, while accelerating structural reforms to sustain strong growth and create more jobs,” Hajdenberg added.
Economic Developments, Outlook, and Risks
In the concluding statement, the IMF said Georgia’s economic growth momentum “remained firm in early 2026,” before the start of the Middle East conflict, citing that average real GDP growth was 8.4% in January-February, up from 7.5% in 2025. It noted that the impact of the war in economic terms, “has so far been limited and concentrated mainly on tourism.”
Assuming the conflict is “short-lived,” the IMF projects real GDP growth to “ease to 5.3 percent this year before converging to its potential rate of around 5 percent in the medium term.”
Inflation stood at 4.3% in March, “driven by increases in fuel and electricity prices,” with IMF expecting that it will stay “elevated in the first half of 2026, driven by increases in fuel and electricity prices, before converging to target by mid-2027 as the one-off effects of higher food and energy prices dissipate, demand moderates, and the output gap closes.”
Georgia’s fiscal performance “has been strong” in 2025, according to the IMF, which noted that “implementation and procurement bottlenecks experienced last year are expected to ease, with major infrastructure projects moving forward.”
“The outturn is projected to be somewhat lower than budgeted, supported by higher-than-expected NBG dividends and strong revenue performance. The successful rollover of a $500 million Eurobond in January underscores investor confidence in Georgia’s macroeconomic fundamentals and policy credibility,” it further said.
The IMF projected a few alternative scenarios that might affect the economic situation in Georgia.
It said that a possible escalation of the Middle East conflict could “further disrupt tourism inflows from Israel and the Gulf countries, raise inflation, and tighten financial conditions,” while a “more protracted conflict could also see redirected financial and tourism flows toward Georgia and increased transit along the Middle Corridor.”
“A peace settlement in Ukraine could unwind some of the gains from migration, financial inflows, and transit trade, but would also support broader regional stability and confidence,” it further said, adding that Azerbaijan-Armenia’s peace agreement “could result in new trade routes that bypass Georgia but also attract more investment to the region as a whole.”
Commenting on the Georgia-EU strained relations, the IMF said: “Challenges in the relations with the EU could dampen investor sentiment and foreign direct investment, while the planned USD 6.6 billion real estate project by a UAE investor represents a significant upside to growth and employment.”
Recommended Steps
Commenting on the country’s monetary policy, the Bank said Georgia should remain “focused on ensuring that inflation returns sustainably to target,” while preserving exchange rate flexibility and limiting foreign exchange interventions to “smoothing episodes of excessive volatility.” It also recommended “continued opportunistic reserve accumulation,” which it said will “further reinforce precautionary buffers in Georgia’s highly dollarized economy.”
The IMF noted that the National Bank of Georgia has implemented “most recommendations” from its 2022 Safeguards Assessment, but emphasized that “advancing NBG governance reform remains essential to strengthen institutional safeguards,” adding that further improvements in board oversight are needed “to fully align the NBG’s governance framework with international best practices.”
On labor market reforms, the IMF said that “sustaining strong growth and expanding job creation will require addressing persistent constraints,” noting that in this light “a key challenge is structurally high unemployment, particularly among youth, driven by skill mismatches and weak work incentives amid low wages.”
Recommended reforms include “supporting vocational education and training and improving public employment services to better align skills with labor market needs, aligning social assistance with work incentives, and supporting high-productivity sectors that generate well-paid jobs,” while noting that continued engagement with development partners and sector participants would support those efforts.
The IMF emphasized that continued investment in energy, transport, and logistics infrastructure is essential to boost “competitiveness and connectivity.” It also highlighted the importance of accelerating infrastructure development and deepening regional cooperation to reinforce Georgia’s role as a trade and transit hub.
“Strengthening anti-corruption and judicial institutions, alongside maintaining a predictable and market-friendly policy environment, will be key to sustaining business confidence and investment,” it said.
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