Monthly Economic Review - 2025 Macro Outlook - January 2025

Download Report (Eng)

Download Report (Geo)

Growth: Georgia’s economic growth was 6.7% y/y in Dec-24, following 7.5% y/y growth in previous month. This growth was mainly driven by increased activity in the financial & insurance, professional & scientific, transport, trade and ICT sectors, while the manufacturing sector contracted. Overall, Georgian economy grew by 9.5% in 2024, after a 7.8% posted in 2023. Nominal GDP increased by 13.5% to GEL 91.8bn (US$ 33.7bn) and GDP per capita reached US$ 9,124 (+10.1% y/y) in 2024. 

Inflation: In Dec-24, annual inflation rose to 1.9%, from 1.3% posted in November, bringing the average annual inflation rate to 1.1% for 2024. This increase in December was mainly driven by an acceleration in mixed goods inflation to 3.9% y/y (+3.1% y/y in Nov-24), along with a rise in inflation for domestically produced goods and services to 2.2% y/y (+1.8% y/y in Nov-24). Meanwhile, imported inflation declined by -0.9% y/y (-1.7% y/y in the previous month). Notably, core inflation, excluding volatile food, energy and tobacco prices, rose further to 2.3% y/y in Dec-24 from 1.6% y/y in November. We expect average annual inflation at 3.9% in 2025.

Monetary policy: On January 29, 2025, the Monetary Policy Committee of the NBG decided to maintain its key interest rate at 8.0%. While 2024 saw robust economic growth and inflation below the 3.0% target, the NBG cited considerable uncertainty as the primary factor in maintaining the rate. This uncertainty stems from both domestic economic factors and ongoing geopolitical instability. The regulator is cautious about future rate adjustments, aiming for a gradual normalization toward a neutral rate of 7.0%, depending on upcoming economic data and risk assessments.

FX: In Jan-25, the GEL depreciated by 2.5% m/m against the USD, mainly driven by negative market sentiments. We anticipate continued GEL volatility throughout 2025, with average GEL rate at 2.88 vs dollar.