One of the most important signals in Georgia’s first-quarter 2026 business sector data is the growth of manufacturing. Turnover in manufacturing increased by 15.4%, while output grew by 20.8%. This means that the sector is growing faster than the business sector average: total business sector turnover increased by 10.7%, while total output increased by 12.4%.
This is important because manufacturing belongs to the part of the economy that does not only reflect monetary circulation. It creates real products, local value, technical skills, jobs, supplier networks and export potential.
Georgia’s economy is often dominated by services, trade, finance, real estate and consumption-driven activity. Against this background, the 20.8% growth in manufacturing output is one of the most interesting signals in the data. It may indicate that there is room for deeper productive development in the economy.
BTU researchers assess that the key question is this: is this a one-off increase, or can it become the beginning of a new phase of industrial development for Georgia? If manufacturing growth connects with technology, exports, workforce training, energy, logistics and local small and medium-sized businesses, it can strengthen the quality of the economy.
why manufacturing matters
Manufacturing is not just one sector of the economy. It is one of the main mechanisms of value creation. When a country manufactures, it creates products, technical skills, jobs, supplier networks, quality standards, export potential and local economic knowledge.
Trade can quickly increase turnover. Finance can create capital movement. Real estate can create assets. But manufacturing creates the foundation on which an economy can stand more sustainably: products, technology, skills and markets.
This is especially important for Georgia because the country has a small domestic market. A small market cannot sustain long-term rapid growth only through domestic consumption. If the country wants to create more value, it needs sectors that are not limited only to local consumers and can reach regional or international markets.
Manufacturing is one of those sectors.
What happened in the first quarter of 2026
In the first quarter of 2026, manufacturing turnover reached GEL 4.614 billion. In the same period of the previous year, the figure was GEL 3.997 billion. The growth rate was 15.4%.
The output growth was even stronger. Manufacturing output increased from GEL 3.756 billion to GEL 4.538 billion, representing growth of 20.8%.
Together, these two indicators are especially interesting. Turnover shows growth in sales and monetary flows, while output shows growth in production and economic value created. When output grows faster than turnover, it may indicate that not only sales are increasing, but productive activity is strengthening.
In the business sector as a whole, turnover increased by 10.7%, while output increased by 12.4%. Manufacturing exceeded these average growth rates, making it one of the most important economic directions in the first quarter of 2026.
Why 20.8% output growth matters
The growth of manufacturing output carries deeper economic meaning than a sectoral statistic.
First, manufacturing creates real products. It is the part of the economy where raw materials, labor, technology and knowledge are transformed into new value.
Second, manufacturing creates supplier networks. A single factory often connects to transportation, packaging, energy, technical services, logistics, finance, marketing and sales. Therefore, manufacturing growth also activates other sectors.
Third, manufacturing creates regional opportunities. Unlike finance and professional services, which are often concentrated in Tbilisi, manufacturing can develop in regions where land, energy, labor, local raw materials or logistics advantages exist.
Fourth, manufacturing creates export potential. This is especially important for Georgia because sustainable economic growth cannot rely only on domestic consumption.
Fifth, manufacturing develops skills. Factories create technical knowledge, quality control, process management, engineering, digital operations, automation and professional discipline.
Manufacturing and the “real economy”
The term “real economy” is often used to describe sectors that create products, services, infrastructure, productive value and jobs. In this sense, manufacturing is one of the core elements of the real economy.
When manufacturing grows, the country becomes less dependent on resale, consumption, asset prices or service cycles. It begins to create more value.
For Georgia, strengthening the real economy means:
more local products;
more export potential;
more regional jobs;
more technical professions;
more small and medium-sized suppliers;
stronger links between education and industry;
greater economic resilience.
This is why manufacturing growth is not only the success of one sector. It may be a sign of structural deepening.
Why 15.4% turnover growth also matters
Output growth shows that the sector is creating more value. Turnover growth shows that this output has a market – companies are selling more or selling at higher value.
If manufacturing output grows but turnover does not, this may indicate a sales problem. If turnover grows but output does not, it may reflect prices or resale effects. In the first quarter of 2026, both indicators increased, creating a stronger picture.
However, caution is necessary. The data is nominal and expressed in lari. This means that price effects may be included in both turnover and output growth. To understand real volume growth, price-adjusted analysis is needed.
Still, when manufacturing output grows by 20.8% and turnover by 15.4%, the signal is strong enough for the sector to deserve strategic attention.
The link between manufacturing and exports
For Georgia, one of the main reasons manufacturing growth matters is exports. A small market has limited domestic demand. If a factory depends only on local consumers, its growth ceiling appears quickly. But if products enter regional or international markets, the scale expands.
Export-oriented manufacturing gives a country several advantages.
First, it increases income in foreign currency.
Second, it reduces dependence on domestic demand alone.
Third, it pushes companies to improve quality, standards, packaging, certification and management.
Fourth, it creates local supplier networks.
Fifth, it increases international recognition of Georgian products and brands.
This is why manufacturing growth becomes fully meaningful when it connects with export growth.
The need for industrial policy
Manufacturing growth naturally raises a question: does Georgia need a clearer industrial policy?
Industrial policy does not mean that the state should manage every factory. In a modern sense, it means that the country identifies which manufacturing directions have competitive potential and supports them with skills, infrastructure, access to finance, export support, technology and standards.
For Georgia, possible directions may include:
food processing;
wine and agricultural exports;
light industry;
textiles and design-based production;
pharmaceutical and health-related products;
construction materials;
electrical and engineering components;
packaging and logistics-related production;
green technologies;
digitally managed small manufacturing.
The country cannot develop every industry at the same time. It needs focus, data-based choice and close cooperation with the private sector.
Manufacturing and the regions
Manufacturing is especially important for regions. If economic activity is heavily concentrated in Tbilisi, regions need sectors that create jobs locally. Manufacturing is one of the best ways to do this.
Regional manufacturing can be connected to local resources: agriculture, mineral waters, fruit, hazelnuts, wine, dairy products, timber, tourism demand, energy, logistics nodes or proximity to neighboring markets.
But regional manufacturing does not emerge only by building factories. It requires talent, transport, energy, quality laboratories, finance, management, market access and digital tools.
If manufacturing growth spreads to the regions, it can become not only an economic instrument, but also a tool of social balance for Georgia.
Manufacturing and technology
Modern manufacturing is no longer only machinery and labor. Increasingly, it is data, automation, quality control, digital planning, inventory management, energy efficiency, robotics, AI analytics and supply-chain management.
For Georgia, this means that manufacturing development must also be technological development.
AI and data analytics can be used for:
demand forecasting;
inventory optimization;
quality control;
reducing energy consumption;
predictive maintenance;
export market analysis;
supplier and logistics management.
If Georgian manufacturers do not develop digital capabilities, their competitiveness will remain limited. If they do, manufacturing can become not an old industrial model, but part of the new technological economy.
Human capital – the key constraint and opportunity
Manufacturing growth cannot deepen without people. Factories need technicians, engineers, quality-control specialists, operations managers, technologists, logistics specialists, digital-system operators and export managers.
This means that manufacturing policy must be directly connected to education.
Universities, vocational colleges and businesses should create programs linked to real industrial tasks. Practical education, technology labs, industrial internships, data work and modern management skills are especially important for the country.
If Georgia does not connect manufacturing growth with workforce development, growth may remain short-term. If it does, manufacturing can become a source of professional-class strengthening.
Where the opportunity is
Manufacturing growth creates several major opportunities for Georgia.
The first is export diversification. If manufacturing expands, the country can build a more diverse export structure.
The second is regional employment. Factories can become a foundation for regional economic strengthening.
The third is the inclusion of small and medium-sized businesses in value chains. Larger manufacturers need suppliers, services, packaging, logistics and technical support.
The fourth is technological renewal. Manufacturing can become a practical space for AI, data, automation and digital management.
The fifth is partial import substitution. It is neither possible nor necessary to produce everything locally, but in some categories, stronger local production can increase economic resilience.
Where the risks are
The main risk is that manufacturing growth turns out to be temporary and does not become a long-term industrial trend.
The second risk is low technological intensity. If manufacturing remains based only on cheap labor, it will not create high wages and will struggle against international competition.
The third risk is weak export linkage. If manufacturing remains limited to the domestic market, its growth scale will remain restricted.
The fourth risk is shortage of skills. Lack of technical and vocational skills will constrain industrial expansion.
The fifth risk is access to finance. Manufacturing is more capital-intensive than many service businesses. Factories need long-term finance, technological investment and risk management.
What Georgia should consider
Georgia should not treat manufacturing growth only as a statistical update. It should turn it into a strategic opportunity.
Several questions are important:
Which manufacturing segments are actually growing?
Which have export potential?
Which regions can become manufacturing centers?
What types of skills does the sector need?
What technological investments are necessary?
How does manufacturing connect with local SMEs?
How can factories use AI and data analytics?
How can quality standards and certification be strengthened?
The answers to these questions will determine whether manufacturing growth becomes a foundation for strengthening the real economy.
Why this matters for Georgia
Manufacturing growth matters for Georgia because it makes the economy more resilient. A country that depends only on consumption, services, assets or resale of imports is more vulnerable to external shocks. A country that creates products, develops technical skills and exports stands on a stronger economic foundation.
The 20.8% growth in manufacturing output may be an early sign that Georgia has an opportunity to strengthen the real economy. But this opportunity requires deliberate policy, education, technology and business support.
BTUAI assessment
BTUAI assesses that the 20.8% growth in manufacturing output in the first quarter of 2026 is one of the most important positive signals for Georgia’s economy. It is especially notable that output growth exceeded turnover growth, which may indicate not only stronger sales, but also stronger productive activity.
However, one quarter of data is not enough to conclude that a long-term industrial transformation has begun. It is necessary to observe whether the trend continues, which subsectors are growing, and whether the growth connects with exports, regions, technological renewal and better jobs.
BTU researchers assess that Georgia’s next task is to turn manufacturing growth into an industrial development policy. This requires technological investment, vocational education, export support, quality standards, regional specialization and the inclusion of small and medium-sized businesses in value chains.
The main conclusion is this: manufacturing is growing, but its real importance will appear only if this growth turns into productivity, exports, regional jobs and technologically upgraded industry.
Key findings
- In the first quarter of 2026, manufacturing output increased by 20.8%.
- Manufacturing turnover increased by 15.4%.
- Manufacturing grew faster than the business sector overall, where turnover increased by 10.7% and output by 12.4%.
- Faster output growth may indicate strengthening productive activity.
- Manufacturing matters for Georgia because it creates exports, regional jobs, technical skills and local value.
- Sustainable growth requires technology, workforce skills, quality standards, finance and export orientation.
- Manufacturing growth can become a foundation for industrial policy, regional development and digital transformation.
Data snapshot
Total business sector turnover in the first quarter of 2026 – GEL 62.0 billion.
Business sector turnover growth – 10.7%.
Business sector output – GEL 23.3 billion.
Business sector output growth – 12.4%.
Manufacturing turnover in the first quarter of 2025 – GEL 3.997 billion.
Manufacturing turnover in the first quarter of 2026 – GEL 4.614 billion.
Manufacturing turnover growth – 15.4%.
Manufacturing output in the first quarter of 2025 – GEL 3.756 billion.
Manufacturing output in the first quarter of 2026 – GEL 4.538 billion.
Manufacturing output growth – 20.8%.
Manufacturing share in business sector output structure – 19.5%.
Manufacturing share in employment – 11.4%.
Methodology
This report was prepared as part of BTUAI Research. The analysis is based on demographic, regional, economic and behavioral data, as well as general trends observed in publicly available sources. The materials are processed using analytical methods applied by BTU researchers, with the support of BTUAI.
The purpose of the research is not to provide personal assessments, but to identify broader trends and practical directions for business, education and society.
In this specific material, first-quarter 2026 enterprise activity data is analyzed in the context of manufacturing growth, the real economy, industrial policy, export potential, regional development, technological renewal and Georgia’s economic diversification.
Limitations
This material is analytical and educational in nature. It does not constitute financial, investment, legal, tax or individual business decision-making advice. Before making specific decisions, consultation with a relevant specialist is required.
The data reflects a quarterly picture of the business sector and is not sufficient to determine a long-term industrial trend. Sustainable conclusions require multi-year, sectoral, regional and export-data analysis.
The indicators are nominal and require consideration of price effects in order to fully assess real volume growth.
Sources
National Statistics Office of Georgia – “Results of Enterprise Activity, First Quarter of 2026.”
BTUAI analytical processing for the context of Georgia’s manufacturing sector, industrial policy, exports, regional development and strengthening of the real economy.
Frequently asked questions
Why is 20.8% growth in manufacturing output important?
Because manufacturing creates real products, local value, technical skills, jobs and export potential. Its growth is a signal of economic deepening.
Does this mean Georgia’s industrial transformation has already begun?
Not conclusively. One quarter of data is a positive signal, but a long-term conclusion requires several quarters and more detailed subsector analysis.
Why does manufacturing matter for exports?
Manufacturing creates products that can be sold in regional or international markets. This reduces dependence on domestic consumption.
What does Georgia need to strengthen manufacturing?
Georgia needs technological investment, vocational education, quality standards, export support, energy and logistics infrastructure, and the inclusion of SMEs in value chains.
What is the main risk?
The main risk is that manufacturing growth remains temporary and does not become technologically upgraded, export-oriented and regionally balanced industrial development.
Keywords
manufacturing Georgia; industrial policy; real economy; output growth; turnover; business sector; exports; local production; regional development; technological manufacturing; AI in manufacturing; productivity; Georgian economy; BTUAI; Business and Technology University; export potential.
Citation format
BTUAI Research Team. “Manufacturing Is Growing – Can Georgia Strengthen the Real Economy?” Business and Technology University, BTUAI.ge, 2026.
Prepared by the academic team of Business and Technology University and the BTUAI Research Team.
Tbilisi, Georgia
BTUAI is an analytical platform of Business and Technology University that studies the impact of artificial intelligence, digital transformation, innovation, startup ecosystems, data analytics and emerging technologies on business, the economy, education and society. BTUAI materials are designed to explain complex technological and economic changes in a clear, reliable and Georgia-focused way.