Georgia’s latest economic data show that the production sector is one of the key pillars of the country’s real economy. According to Geostat data for the first quarter of 2026, production accounted for 19.5% of total business sector output, the highest share among major sectors. During the same period, the sector’s turnover increased by 15.4% year-on-year, while output rose by 20.8%.
This means that production should no longer be viewed only as a traditional industrial activity. It is now one of the areas where Georgia’s economic growth, productivity challenge, technological renewal, energy costs and export potential intersect.
BTU researchers interpret the latest data as both an opportunity and a warning. The opportunity is clear: production is growing faster than the average business sector. The warning is also clear: without investment, technology, energy efficiency and higher value-added products, growth may remain quantitative rather than structural.
Production is already at the front line of Georgia’s real economy
In the first quarter of 2026, Georgia’s business sector turnover reached GEL 62.0 billion, up 10.7% year-on-year. Total business sector output reached GEL 23.3 billion, an increase of 12.4% compared with the same period of the previous year.
Within this broader picture, production stands out because it holds the largest share of output. This is important because output is not only about money changing hands; it reflects the creation of goods, material value and potentially exportable products.
In simple terms, trade shows how money moves through the economy. Production shows what the country creates.
Output is growing much faster than employment
In Q1 2026, the turnover of Georgia’s production sector reached GEL 4.614 billion, up 15.4% year-on-year. Sector output reached GEL 4.538 billion, up 20.8%. At the same time, employment in the sector increased by only 0.9%, reaching 91,037 people.
This combination matters. When output rises much faster than employment, it may signal an improvement in value created per worker. This does not automatically prove that the sector has become highly productive, but it does show a direction: growth is not simply being driven by more people entering the sector.
For Georgia, this is a positive signal only if the growth is connected to technology, better management, improved quality, energy efficiency and broader market access. If growth is driven mainly by temporary demand or price effects, it will not become a long-term economic strength.
The real challenge is value, not only volume
The main question for Georgia’s production sector is no longer only how to produce more. The more important question is how to produce higher value.
This means that Georgian producers need to move beyond volume and focus on quality, standards, branding, technology, energy efficiency, export readiness and integration into more advanced value chains.
Producing a simple product or supplying low-margin goods creates limited value. Producing standardized, higher-quality, branded or export-oriented goods creates a different economic effect. It allows companies to pay better wages, invest in technology and compete beyond the local market.
Investment remains below the sector’s strategic importance
Foreign direct investment data show that FDI in Georgia reached USD 271.2 million in Q1 2026, up 47.7% year-on-year. However, FDI in the production sector amounted to only USD 18.5 million. By comparison, financial and insurance activities attracted USD 125.1 million, real estate attracted USD 48.8 million, and information and communication attracted USD 37.2 million.
This shows a mismatch. Production is the largest sector in business output, but it does not yet attract foreign investment at a scale that reflects its economic importance.
This is not necessarily a sign of weakness. It may also indicate untapped investment potential. But to unlock it, Georgia needs to offer investors a clearer proposition: reliable energy, skilled labor, regional market access, logistics capacity and a predictable business environment.
Energy and logistics are becoming competitiveness issues
Production is highly sensitive to energy, transport, input and logistics costs. Other recent data also show that cost structures are becoming increasingly important for Georgia’s real economy. For example, in the construction cost index, the cost category of transportation, fuel and electricity increased by 12.7% year-on-year in April 2026 and made one of the largest contributions to the annual increase in the index.
Although this indicator directly concerns construction, it also carries an important signal for production. Energy and transport costs are becoming core competitiveness factors for sectors that create physical goods.
This means production policy cannot be separated from energy policy, logistics policy and infrastructure planning. For Georgia, these areas must be treated as one economic system.
The next stage must be technological renewal
For Georgia’s production sector, the next stage is not only about opening new factories. It is also about upgrading existing production capacity.
This includes automation, digital quality control, energy-efficient equipment, production planning systems, data-based management and the use of AI tools for demand forecasting, inventory management, cost control and quality monitoring.
Without technological renewal, rising wages and input costs may reduce competitiveness. With technological renewal, the sector can generate more output, better jobs, higher-quality products and stronger export potential.
Key findings
- Production accounted for 19.5% of total business sector output in Q1 2026, the highest share among major sectors.
- Production output increased by 20.8% year-on-year, faster than total business sector output.
- Employment in the sector increased by only 0.9%, suggesting a potential productivity signal.
- FDI in production reached only USD 18.5 million in Q1 2026, below the sector’s strategic economic weight.
- The sector’s main challenge is not only to produce more, but to create higher local value.
- Energy and transport costs are becoming central to the competitiveness of Georgia’s real economy.
- Technological renewal is essential if production growth is to become a long-term economic advantage.
Data and evidence base
Georgia’s business sector turnover reached GEL 62.0 billion in Q1 2026, while total output reached GEL 23.3 billion. The annual growth rates were 10.7% and 12.4%, respectively.
Production turnover increased from GEL 3.997 billion to GEL 4.614 billion, or by 15.4% year-on-year. Production output increased from GEL 3.756 billion to GEL 4.538 billion, or by 20.8%.
Employment in production increased from 90,237 to 91,037 people, or by 0.9%.
In the structure of business sector output, production ranked first with 19.5%, followed by trade at 16.7%, construction at 13.6%, information and communication at 11.7%, and transport and storage at 9.5%.
In Q1 2026, FDI in production amounted to USD 18.5 million. The sector attracted USD 161.3 million in 2025 and USD 183.6 million in 2024.
Why does this matter for Georgia
Production matters for Georgia for three main reasons.
First, it creates real goods and material value. A country cannot build a resilient economy only on trade, real estate and services. It needs sectors that create products, jobs and export potential.
Second, production is linked to economic resilience. The more Georgia can produce locally, the less vulnerable it becomes to external shocks, supply disruptions and excessive import dependence.
Third, production can become a practical space for technological development. AI, automation, data analytics and energy efficiency deliver visible results in production: lower waste, better quality, more precise planning and higher productivity.
Georgia’s challenge is to ensure that production does not remain only a volume-driven sector. It must become a foundation for higher-value, technology-enabled and export-oriented economic development.
BTUAI assessment
BTUAI assesses the latest data as both a strong signal and a strategic warning for Georgia’s production sector.
The strong signal is that production is the leading sector in business output and is growing faster than the overall business sector average. This shows that Georgia’s real economy has a sector capable of creating significant value.
The warning is that investment remains insufficient for the scale of technological renewal the sector needs. Energy, transport and input costs will increasingly define the future competitiveness of producers.
In BTUAI’s view, the next question for Georgia’s production sector is no longer simply “how much do we produce?” The real question is: what value do we create, how efficiently do we create it and can we sell it competitively beyond the local market?
If Georgia connects production with energy efficiency, technological renewal, vocational education, export strategy and data-based management, the sector can become one of the country’s most important long-term economic pillars.
Article identification
Article type: Sectoral analytical article
Topic: Georgian economy, production, productivity, investment, technological renewal
Geographic focus: Georgia
Period: Q1 2026
Main sources: Geostat business sector data, FDI statistics, construction cost index
Prepared by: BTUAI Research Team, Business and Technology University
Platform: BTUAI.ge
Publication year: 2026
Methodology
This analysis is based on publicly available official statistical data, including Geostat’s Q1 2026 business sector results, foreign direct investment statistics and cost-related indicators from the construction cost index. The data were analyzed by sectoral share, annual growth, employment, output, investment and cost-related risk factors.
The purpose of the article is not to assess individual companies, but to identify broader trends in Georgia’s production sector and highlight practical implications for business, economic policy and education.
Limitations
This article is based on publicly available data and analytical interpretation. It is not an official statistical report and does not constitute investment, financial, legal or professional advice. Some indicators may change after new or revised data are published. Specific business or investment decisions should be made in consultation with relevant professionals.
Sources
National Statistics Office of Georgia – Business Sector Results, Q1 2026.
National Statistics Office of Georgia – Foreign Direct Investment in Georgia, Q1 2026.
National Statistics Office of Georgia – Construction Cost Index in Georgia, April 2026.
FAQ
Why is production important for Georgia’s economy?
Because it creates real goods, local value, jobs and export potential.
Is production Georgia’s largest sector?
In terms of business sector output, production ranked first in Q1 2026 with a 19.5% share.
What does faster output growth than employment growth mean?
It may indicate a potential productivity improvement, but additional data on technology, capital, prices and real productivity are needed for a full assessment.
What is the main risk for the sector?
The main risks are rising energy and transport costs, insufficient investment, technological lag and remaining in low value-added production.
What should Georgian businesses do?
They should invest in technological renewal, quality control, energy efficiency, data-based management and export readiness.
Keywords
Georgia production sector, Georgian economy, productivity, industrial development, export potential, foreign direct investment Georgia, energy efficiency, BTUAI, Business and Technology University.
Citation format
BTUAI Research Team. “What Should Georgia’s Production Sector Consider Based on the Latest Economic Data?” Business and Technology University, BTUAI.ge, 2026.
Prepared by the academic team of Business and Technology University and the BTUAI Research Team.
Tbilisi, Georgia