Georgia's headline GDP growth figures conceal a more troubling reality: the factors that drove the economy's expansion since 2022 were largely temporary and are already beginning to fade, leaving the country exposed to a period of turbulence that could challenge the political legitimacy of the ruling Georgian Dream party, according to an analysis published by the Central Asia-Caucasus Analyst.

GDP growth reached 9.7% in 2024 and is estimated at 7.5% in 2025, with international financial institutions forecasting 5-5.5% for 2026. But authors Tomáš Baranec and Giorgi Khishtovani argue these figures were driven by five factors, three of them directly linked to the Russian invasion of Ukraine, none of them structural.

The post-COVID rebound accounts for the initial surge. Then came the mass arrival of over 80,000 Russian citizens, mostly IT professionals and higher-income groups, who stimulated housing, construction and the IT sector while Russian capital flowed into Georgian banks. Georgia also became a transit corridor for sanctioned goods destined for Russia, with passenger car re-exports to Kyrgyzstan and Kazakhstan reaching $2.81bn in 2025. Two secondary factors, a surge in foreign students from countries previously sending students to Ukrainian universities and Russian tourists benefiting from Georgia's refusal to ban flights from Russia, rounded out the picture.

The analysts say several of these drivers have already peaked. The ICT sector, inflated by tax incentives introduced in 2020 that attracted Russian and Belarusian IT professionals, grew rapidly through 2025 but has masked weakness elsewhere. Energy contracted 3.3% in the third quarter of 2025, agriculture fell 5.4%, and construction and trade posted weak growth. Employment in the Georgian economy declined in the same period, most probably due to emigration. Budget revenue growth slowed from 25% in 2024 to 10% in 2025, with 4% of that offset by inflation, a trend the authors say contradicts the headline GDP figure.

The analysis warns that an end to the war in Ukraine could deliver the most severe blow. A restoration of trade between Moscow and the West would remove Georgia's role as a sanctions corridor and could reverse the capital and population flows that have sustained growth. The recent outbreak of conflict in Iran adds further uncertainty to an already precarious outlook.

Georgian Dream's ability to manage the slowdown will partly depend on factors outside its control, the authors conclude. The party has used strong economic figures to fund increased salaries and social benefits for a loyalty base of civil servants and benefit recipients. After 2025 it is running short of resources to sustain that approach. "Unlike the mass protests, a significant deterioration in the population's socio-economic situation could undermine support for the ruling party, even among its core electorate," the authors write.