Georgia’s foreign direct investment (FDI) rose modestly in 2025 after two consecutive years of decline, signaling a tentative recovery in investor confidence following a period of domestic political uncertainty, according to a report from GlobalSource Partners. 

The rebound coincides with a period of political stabilisation. After the October 2024 parliamentary elections and subsequent local polls, the ruling Georgian Dream party consolidated its control. 

The report notes that after the ruling Georgian Dream won the October 2025 local elections, a year after its general election win, “the domestic political backdrop has largely settled down… Markets seem to have taken notice of that and, in addition to the record 2025 year for tourism revenues, have now also delivered on FDI inflows in 2025, albeit not to a degree that can [be] described as exceptionally strong.”

Annual figures show a 7.6% increase in FDI following the large decline of 2024, a rebound after FDI fell by 13.3% in 2023 and by a further 18.6% in 2024 as political turbulence unfolded. However, GlobalSource analysts caution that while nominal inflows increased, FDI remained broadly stable as a share of GDP at 4.6%, roughly the same level as in previous pre-pandemic years.

“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,” the report’s author Ivan Tchakarov of GlobalSource Parters noted. 

“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.”

Tchakarov points to Georgia’s successful Eurobond issue in January, which was almost six times oversubscribed, though he notes it placed at higher rates than the previous 2021 bond.

FDI remains a crucial source of financing for Georgia’s balance of payments, according to the analysis. The decline in 2023-2024 coincided with political uncertainty following the adoption of the Transparency Law and turbulence surrounding the October 2024 parliamentary elections, which “led to expectations that FDI might suffer because most FDI originated from countries with a negative view of the events that were transpiring in the country.”

Growth in FDI in 2025 was driven largely by increases in equity and reinvestment of earnings, recovering after a sharp decline in 2024. Debt instruments, including trade credits and loans, also saw more moderate outflows compared with previous years.

FDI continues to be concentrated among Western investors. “FDI originating in the EU has always stood out, but inflows from the UK became more pronounced in the last decade. If we add the US, then those three sources have accounted for 60-78% of FDI in the last 5 years (2021 to 2025).” By individual countries, the report noted the United Kingdom accounted for 19.8%, Turkey 10.7%, and Malta 10.3% of total FDI in 2025.

In terms of sectoral distribution, the finance, real estate, and transportation/communication sectors absorbed the bulk of FDI, reaching 66.7% of total inflows. 

“There has been a shift in the sectoral distribution of FDI over the years, with transportation, communication and construction leading in the previous decade up to 2018… In subsequent years, FDI has re-oriented itself predominantly into the finance, insurance and real estate sectors.”

The accumulated stock of FDI in Georgia as of 2025 stood at $27.78bn, or about 74% of estimated GDP, with finance and transportation sectors leading. 

“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,” the report said. 

The 2025 FDI rebound comes alongside record foreign exchange reserves and strong tourism revenues. A key element of the recovery has been investor confidence returning to the country following a period of political instability. 

“I believe that political instability will be relatively modest all the way through the next regular 2028 parliamentary elections,” Tchakarov wrote, suggesting that markets have factored in a stable domestic environment for the foreseeable future.

The broader picture shows a mixed but improving landscape for Georgia’s FDI. While the 2025 rebound does not signal an exceptional surge, it marks the first step toward normalisation. Western investment remains dominant, the finance and real estate sectors are increasingly attractive, and major projects like Emaar’s planned developments may further boost capital inflows in the medium term.