Georgia’s Global Financial Challenge in 2025

In the first quarter of 2025, Georgia’s current account deficit reached $660.1 million (₾1.9 billion), amounting to 8.5% of the country’s GDP. This figure marks a significant deterioration compared to the same period in 2024, when the deficit stood at $351 million—or just 5% of GDP. The current account deficit is a critical indicator of economic health, showing the gap between the foreign currency flowing into the country and that flowing out. In essence, it reflects that Georgia is spending more than it earns, especially on imports and debt servicing.

The primary driver of the growing deficit remains the negative trade balance, which surged by 15.1% year-over-year to reach $1.7 billion. This development stems from two main factors: while exports grew by 5.5%, imports grew even faster—by 10%. With export growth unable to keep pace with rising demand for imports, the trade gap widened significantly.

Despite these structural weaknesses, several growing sectors are partially offsetting the deficit. The most notable among them is tourism, which brought in $826 million in Q1—a 2.3% increase from the same period last year. The export of computer and IT services remains on a fast growth trajectory as well, totaling $266 million, or 3.4% of GDP. Additionally, transport services exports performed strongly, reaching $386 million, equivalent to 5% of GDP.

However, Georgia’s net income account deteriorated further, recording a negative balance of $537.5 million. A particularly sharp drop occurred in net labor income, which fell by 63%, and investment income outflows also increased. This means that foreign investors are taking more profits out of the country than Georgia is earning abroad, further worsening the balance.

Remittances, one of the more stable components of the current account, also saw a decline. In Q1 2025, money transfers totaled $876 million, reflecting a 5% drop in net private sector transfers.

As for foreign direct investment (FDI), net inflows amounted to just $74 million—a concerningly low figure that highlights insufficient investor activity in the country. Altogether, these dynamics signal that Georgia urgently needs a more diversified export portfolio, increased foreign investment, and reduced dependence on imports, to avoid exposing its economy to deeper external financial risks.

The first-quarter statistics of 2025 paint a clear picture: to ensure long-term economic stability, Georgia must focus on reducing import dependence, expanding high-value exports, boosting technology and service-based sectors, and attracting greater levels of FDI, while lessening reliance on remittances. Without effective responses to these challenges, the widening current account deficit could become a serious threat to the country’s financial stability.