On May 19, pro-government media outlets POSTV and Imedi published social media cards about the European Commission’s report on economic growth. In a Facebook post, they compared two sets of figures from the report: on one hand, Georgia’s economic growth in 2024 and its growth forecasts for 2025-2026, and on the other hand, the economic growth forecasts for European countries for 2025, including the EU average.
However, comparing Georgia’s growth rate to that of European countries in this way does not reflect the actual state of the respective economies and may leave readers with a misleading impression. Developing economies tend to grow faster than high-income economies (catch-up effect/convergence theory), as they have more room for growth and each additional unit of capital contributes more to income than in wealthier, economically advanced countries. While a consistently high growth rate is certainly beneficial for a country, comparing it to other countries without considering additional factors is meaningless.
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Comparing Georgia’s Economic Growth to European Countries
The reason why Georgia’s economic growth rate exceeds that of European countries can be explained by the following economic factor: large economies, such as those represented on the social media card, are at a stage of development where rapid growth is no longer typical. We spoke to economist Giorgi Khishtovani about this issue.
“The first thing to note is that when we compare, say, the world’s GDP-ranked number 1, 5, or 10 economy to Georgia, this can, to some extent, be seen as an attempt at manipulation. In reality, Western or European economies are at least ten times bigger, wealthier, and more expansive than Georgia’s economy. Naturally, when we talk about growth, economic law tells us that such large economies rarely grow by more than 2%, 3%, or 4%. At their current stage of development, they simply do not grow faster.
At the same time, it’s interesting to note that when we say Georgia’s economy is growing by 9%, and Germany’s by 2%, due to Germany’s economy being many times larger, that 2% growth in absolute terms exceeds Georgia’s. For example, if we calculate what 2% growth means in euros or dollars for Germany, it will very likely be a greater absolute figure than the growth Georgia experienced, even with a 9% growth rate. In other words, the gap between Georgia and Germany isn’t shrinking in such cases. Of course, a high growth rate is better than a low one, and of course, it’s a good thing if we exceed Western Europe’s rate, but if we want to catch up, Georgia needs decades of sustained economic growth, and even that doesn’t guarantee that we’ll manage to catch up with even Eastern European countries, because they are significantly larger, wealthier, and more expansive. Therefore, their 2% growth outweighs our 9%,” says Giorgi Khishtovani.
According to 2025 data from the International Monetary Fund, Georgia’s GDP per capita is $9.57 thousand. The European average in this regard is $37.56 thousand (Germany – $55.91; France – $46.79; Italy – $41.09; Spain – $36.19, etc.). Imedi’s social media card compares Georgia’s economic growth rate to that of dozens of European countries. Let’s take one example – Germany. In 2024, Germany’s GDP at constant 2010 prices stands at 765.317 billion euros. Georgia’s GDP at constant 2019 prices in 2024 is 67.5 billion laris (€22.92 billion according to the average euro-to-GEL exchange rate of the National Bank of Georgia for 2024).
According to the latest NDI survey, the majority of the population identifies price increases, unemployment, and poverty as the country’s main problems. For example, in October 2023, inflation concerned 37% of respondents, unemployment 35%, and poverty 28%. The same study shows that poverty and economic hardship are the main contributors to insecurity – 40% of the population say they feel insecure due to poverty when living in Georgia. In a July 2024 study conducted by the CRRC, when asked what the most important issue in the country is, 26% cited unemployment and 13% mentioned poverty.
According to the latest 2023 data from National Statistics Office of Georgia, the relative poverty rate in Georgia is 19.8%. Relative poverty reflects social vulnerability and income inequality and represents the share of the population whose consumption is less than 60% of the median consumption. Notably, in 2023, rural relative poverty increased by 0.2% compared to the previous year, reaching 26.8%.
In addition, as of January 2025 data, a record number of citizens in Georgia – 696,359 people – are receiving social assistance. According to the Health Minister, the reason is that some recipients are not truly eligible and are receiving aid based on outdated registries.
According to Giorgi Khishtovani, despite economic growth, the number of socially vulnerable people in the country is increasing, and relative poverty remains at the same level – this indicates that growth is not reaching the most vulnerable fifth of the population:
“[For people to feel the impact of economic development in their lives], real income growth needs to be at least at the same level as economic growth – growth in household income and wage increases for employed people… Only then can we say the growth is inclusive and affects everyone. If economic growth exceeds real incomes and wages, then we can say it’s not enough and not equally distributed among the population.
We must monitor important indicators, such as the relative poverty rate – this is the indicator used by the EU and Europe to measure poverty levels. We can see that despite high economic growth over the past five years, the figure remains around 20%, which means that, despite the growth, we are not managing to reduce poverty. This is also evidenced by the sharp rise in the number of social assistance recipients in the registry. So, while the economy grows, the number of socially vulnerable people increases, and relative poverty stays the same. If well-being is improving, it is only doing so for one or a few segments of the population, while the poorest and most vulnerable fifth remains excluded and the economic growth is not reflected in their well-being.”
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What Does the European Commission Report Say About Georgia?
The European Commission has published its Spring 2025 European Economic Forecast report. The section about Georgia reviews the country’s economic situation and forecasts. It is in this section that we read about the expected 5%-6% growth rate for 2025–2026:
“Economic growth was very strong in 2024, at 9.4%. Private and government consumption were the most important growth factors, stimulated by strong wage increases, employment growth and fast-growing consumer loans. Investment picked up strongly in the same period, supported by higher business lending, good financial results of enterprises and strong public investment. […] Growth is projected to decelerate in 2025 and 2026 but to remain robust at 5-6%.”
The report also discusses the impact of ongoing developments in the country on the economy:
“Investment is also projected to grow, driven by dynamic business loans and strong public investment, although business confidence has deteriorated markedly in the first quarter of 2025, reflecting the political turmoil in the country.
The contribution of net exports to growth is set to remain negative, although lower than in 2024, as the demand for goods imports triggered by strong consumption and investment is expected to be stronger than the positive contribution from growing tourism and other services exports. The forecast is subject to an unusually high degree of uncertainty regarding domestic political developments and how geopolitical tension plays out in the region, which may adversely affect business and consumer sentiments.”
