Economy Grows by 6.9%: Georgia's Transportation Sector Grows by 19.8%, While Construction Contracts

Georgia’s economy grew by 6.9% year-over-year in the second quarter, according to a report released by the National Statistics Office (Geostat) on September 18. Nominal gross domestic product reached 28.147 billion lari. The growth came from the services sector, not from construction.

Transportation and Digital Sectors Lead, Construction and Agriculture Lag

The transportation and warehousing sector grew by 19.8%. Arts, entertainment, and recreation increased by 17.4%, while information and communication technology rose by 16.6%. Health care services rose by 15%. In contrast, construction contracted by 4.8%, and agriculture by 3.5%.

Trade accounts for the largest share of gross domestic product at 14.9%. This is followed by the real estate sector at 9.1% and industry at 8.9%. Information and communication technology accounts for 7.6%.

Central Bank Keeps Key Interest Rate High

The National Bank of Georgia is keeping the key interest rate at 8.25%. Inflation stood at 5.8% in June; the target is 3%. The bank cites energy prices as the driving factor. On July 29, it stated: “Geopolitical uncertainty remains one of the main risks.” The quote is taken from the original English text and has been translated.

The bank sees growth being driven by high-productivity services. It expects 6.5% for 2026 and reported 7.8% for the first five months. The EBRD forecasts 6%, the International Monetary Fund 6.5%, the World Bank 5.5%, and the United Nations 5.4%, as reported by Caucasus Watch. Geostat will release the revised figures by November 13.

Investments Fall by 23.2%

Foreign direct investment fell by 23.2% in the second quarter to $468.8 million. Geostat attributes this to lower reinvested profits. China is the largest investor at US$219.5 million, ahead of the United Kingdom at US$123.5 million. The United Arab Emirates follows with US$47.7 million. Together, these three countries account for 83.3% of the total. The financial sector attracted $207.6 million, the real estate sector $119.9 million, and the industrial sector $59 million. New equity capital accounted for US$210.5 million, while reinvested profits totaled US$300.5 million.

What this means for German exporters

Georgia remains a growing market for transportation, logistics, and digital services. German providers are finding demand there, particularly along the Middle Corridor. The situation in the construction sector remains weak. Investors should note that China dominates direct investment. The high benchmark interest rate also makes loans for projects in the country more expensive.

Sources: Geostat (EN), National Bank of Georgia (EN), Caucasus Watch (EN), Georgia Today (EN)

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