Georgia is a small transitional market economy of 3.7 million people with a per capita GDP of $4,764 (2019).  Georgia is located at the crossroads between Europe and Asia.  Its strategic location makes it a natural logistics and transit hub along the “New Silk Road” linking Asia and Europe via the Caucasus.

The Georgian economy is growing steadily, but external shocks in the region, such as international sanctions related to the Russia-Ukraine conflict, have had a negative impact on Georgia’s economy and contributed to a relatively low growth rate of 2.9 percent in 2015 and 2.8 percent in 2016.  However, in 2017, 2018, and 2019, the economy grew by 4.8, 4.9, and 5.1 percent, respectively.  While economists expected a 2020 growth rate of over 5 percent, the COVID-19 pandemic negatively affected the country’s economic prospects and economists now project a 5 percent contraction.

In June 2014, Georgia signed an Association Agreement (AA) and Deep and Comprehensive Free Trade Area (DCFTA) with the European Union (EU).  Through reduced tariffs and the removal of technical barriers to entry of exports to the EU, the DCFTA gives Georgian products access to over 500 million people in the EU.  Reciprocally, products from the EU now have easier access to the Georgian market.  The government is in the process of approximating EU legal and regulatory standards.

Launched in 2009, the bilateral U.S.-Georgia Strategic Partnership Commission (SPC) holds regular government-to-government dialogues, including meetings of an Economic, Energy, and Trade Working Group that aims to coordinate Georgia’s economic development strategy and expand bilateral U.S.-Georgia economic cooperation.  In addition to the SPC, in May 2012, the United States and Georgia launched a High-Level Trade and Investment Dialogue to encourage bilateral trade.

Georgia’s successful economic reforms are reflected in its rankings by reputable international organizations.  Georgia ranks 7th in the 2020 World Bank’s Ease of Doing Business index, 12th in the 2020 Economic Freedom Index, and 74th out of 141 global economies in 2019 Global Competitiveness Report.  According to Transparency International, Georgia has the lowest corruption rate in the region and International Credit Rating Agencies (Fitch, Moody’s Investors Service and Standards and Poor’s) rate Georgia as a stable country. 

In 2019, Georgia’s main export markets were Azerbaijan (13.0 percent), Russia (13.0 percent), Armenia (10.9 percent), Bulgaria (7.5), Ukraine (6.5) and the EU accounting for 22 percent of total export..  Georgia’s main sources of imported goods are Turkey (17.0 percent), Russia (10.8 percent), China (9.6 percent), Azerbaijan (6.2 percent), and Germany (4.9).  The EU’s share in total imports to Georgia was 25.6 percent in 2019.  Georgia’s main imports are petroleum products and natural gas, automobiles, copper ore, medicines, tobacco products, and wheat.  After years of declining domestic manufacturing, most consumer goods are imported.

The Georgian government does not control the territories of Abkhazia and South Ossetia, which have been occupied by Russia since the 2008 Russia-Georgia war.  The situation along the administrative boundary lines (ABLs) between Tbilisi‐controlled territory and the Russian-occupied regions remains tense, with ongoing borderization efforts by Russian-led security actors and continued detentions by the de facto authorities of those allegedly “illegally” crossing the ABLs into the occupied territories.