Georgia’s Economy and Remittances: What Does the Global Experience Tell Us?

In 2024, remittances sent by Georgian emigrants reached a record $3.4 billion (source: National Bank of Georgia), equivalent to approximately 10% of the country’s GDP. This figure clearly highlights the significant role these financial transfers play in Georgia’s economic growth. Yet, looking at the experience of other countries, how safe or sustainable is such dependence, and what can Georgia learn from global trends?

According to the latest World Bank report, dependence on remittances tends to be notably high among low and middle-income countries. In Central Asia, countries like Tajikistan and Kyrgyzstan are critically reliant on these funds. In 2023, remittances represented about 33% of GDP in Tajikistan and 31% in Kyrgyzstan. Similarly high figures are observed in Nepal (25%) and Moldova (18%). These countries, much like Georgia, are developing economies that depend heavily on emigrants’ financial support to maintain social stability and drive economic growth.

For a more relevant comparison, Armenia is an insightful example, with remittances accounting for around 12% of its GDP, while Bosnia-Herzegovina’s reliance stands at 14%. Both countries share similar economic characteristics with Georgia, experiencing significant migration and considerable financial inflows from abroad. Yet, like Georgia, both Armenia and Bosnia have managed to partially diversify their economies, particularly through sectors like tourism and services.

Interestingly, high-income countries show virtually no significant reliance on remittances. Nations such as Germany, Sweden, or the United States see remittances comprising less than 1% of their GDP. This underscores that developed economies are sufficiently diversified and stable, reducing the necessity for citizens to seek employment abroad and, consequently, the significance of remittance inflows.

Georgia’s current 10% ratio places it somewhere between extremes—neither as heavily dependent as Central Asian states nor as economically independent as Western European countries. Like Armenia and Bosnia, Georgia has already made strides toward economic diversification, which partly shields it from severe dependence on remittances. Nevertheless, any economic instability in key partner countries—particularly Russia or EU member states—could significantly impact Georgia.

The substantial growth of remittances represents both an opportunity and a challenge for Georgia. In the coming years, the country’s economic policy must prioritize wisely managing this dependence by strengthening local industries and employment opportunities, ensuring remittances remain a beneficial supplement rather than an essential lifeline.