Area

Strengths (Internal)

Weaknesses (Internal)

Opportunities (External)

Threats (External)

Ease of Doing Business

High Transparency & Freedom: Historically ranks high on global indices for economic freedom and transparency. Flat and low tax rates (e.g., 20% flat income tax, 5% for 'International Company Status'). Simple Registration: Quick and streamlined company registration process.

Institutional/Legal Gaps: Complaints about selective law enforcement, political meddling, inefficient municipal decision-making, and difficulties in resolving property disputes. Market Size: Relatively small domestic market (approx. 3.7 million population).

EU Candidate Status: Gained in December 2023, offering a strong anchor for further legal, regulatory, and institutional reforms to align with the EU acquis. FDI Magnet: Favorable conditions and tax regime can continue to attract high-value Foreign Direct Investment (FDI), particularly in the IT sector.

Political Instability: Ongoing domestic political unrest and government actions perceived as anti-democratic by Western partners could significantly deter long-term FDI and business confidence.

Domestic Manufacturing

Strategic Location: Positioned as a key transit hub (Middle Corridor) between Europe and Asia, supporting logistics-intensive manufacturing. Skilled Workforce: Availability of a reasonably skilled and relatively cost-effective labor force.

Low Value-Added Focus: Manufacturing historically contributes a relatively small portion to GDP compared to services (e.g., re-exports, transit trade). Recent Decline: The manufacturing sector experienced a decline in growth in the first half of 2025, even as overall GDP grew strongly.

Infrastructure Investment: Continued investments in transport, logistics, and digital infrastructure to solidify its role as a regional gateway. Nearshoring: Potential for European or Turkish companies to 'nearshore' production to a geopolitically important and trade-friendly hub.

Dependency on Regional Trade: High reliance on neighbors (CIS countries, Turkey) for trade can expose the sector to geopolitical and economic volatility (e.g., slower growth in key trade partners).

Sustainability Initiatives

Hydropower Potential: Near self-sufficiency in electricity thanks to abundant hydropower resources. Commitment to Goals: Approved a 2024-2025 Climate Change Action Plan to meet Paris Agreement and EU Association Agreement obligations (e.g., promoting solar, wind, and public transport).

Green Financing Gap: SMEs (99% of businesses) face significant barriers and limited access to financing for embracing green technologies, despite international funds available for large-scale projects. Lack of High-Level Strategy: Acknowledged absence of a comprehensive, high-level strategic vision for green growth, with its National Green Growth Strategy still under development.

International Funding: Access to substantial international financial institution (IFI) and EU funding dedicated to green infrastructure, energy transition, and climate resilience projects. EU Green Deal Alignment: Pressure and incentives to align with the European Green Deal can drive rapid adoption of new environmental standards and technologies.

Climate Change Vulnerability: Susceptibility to the physical effects of climate change, particularly its impact on hydropower generation and agricultural stability.

Balance of Trade & Global Contribution to Trade

Strong Services Exports: Tourism, transportation (Middle Corridor), and the booming ICT services sector provide strong sources of revenue, offsetting the goods trade deficit. Trade Agreements: Benefits from numerous free trade agreements, including with the EU and CIS countries.

Persistent, Wide Trade Deficit: The goods trade deficit is structurally large and continues to widen ($5.46 billion deficit in H1 2025), with imports consistently growing faster than exports. Reliance on Re-Exports: A significant portion of 'exports' involves the re-export of vehicles, which is volatile and not indicative of robust domestic production.

Transit Trade Growth: Accelerated growth in cargo through the Middle Corridor (connecting Europe to Central Asia) offers long-term growth for Georgia's transit and logistics sector. Diversification: Opportunity to diversify exports beyond traditional resources and agriculture into higher-value goods and niche services.

Geopolitical Sanctions Circumvention Risk: Increased scrutiny and vigilance from Western countries regarding trade with Russia could pressure Georgia's lucrative re-export and transit activities. Commodity Price Volatility: Heavy reliance on imports like oil and pharmaceuticals, making the economy vulnerable to global price fluctuations.