TOPIC OF THE WEEK: Georgia regains investor interest in 2025

CAUCASUS / CENTRAL ASIA - Report 13 Mar 2026 by Ivan Tchakarov

This week the Georgian statistical office reported the much awaited full-year (2025) data on FDI. Similar to the tourist numbers I discussed earlier, FDI has been the subject of intense discussion and speculation over the course of the last two years as the government and the opposition have offered conflicting views on how the political processes in the country would affect these two critical financing items in the BoP. While tourism revenues have set two consecutive years of records, FDI was indeed in the doldrums in 2024, presumably reflecting concerns about domestic politics.

In the event, annual figures point to a 7.6 percent increase in FDI in 2025 following the large decline of 2024. While in nominal terms even the lowish 2024 figure was about double what was received during COVID (2020) and about equal to the numbers for 2018, 2019 and 2021, it was still modest as a share of GDP (4.6%). The 2025 recovery can in principle be read in different ways. On one hand, 2025 FDI rose vs 2024, but, on the other hand, it was broadly constant in terms of GDP. I prefer to take the "glass half full" approach, because the increase in nominal FDI inflows reflects, in my view, the beginning of a normalization in the process of how foreign investors view the country. This has also manifested itself in the successful Jan Eurobond issue, which was almost 6 times oversubscribed, although placed at higher rates relative to the the 2021 bond.

I also think that the much talked about UAE US$6bn investment may finally start this year. There are indeed emerging indications that the process has been activated by the investor. For a start, following the signing of the initial investment agreement by the EMAAR Group and Georgia in Jan'25, parties signed a finalized term sheet in Oct'25, and the UAE company opened a presentation office in Tbilisi in Oct'25. The Georgian government has now also allocated land for the projects, while some real estate agencies have already started to advertise and pre-sell the apartments that are to be built. Despite some fair points of criticism, including the possibility that the current events in the Persian Gulf and Iran might affect investor appetite to continue with the project, the likelihood of its being implemented appears to be higher now than a year ago.

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