The economy of Georgia is an emerging free market economy. Its gross domestic product fell sharply following the dissolution of the Soviet Union but recovered in the mid-2000s, growing in double digits thanks to the economic and democratic reforms brought by the peaceful Rose Revolution. Georgia continued its economic progress since "moving from a near-failed state in 2003 to a relatively well-functioning market economy in 2014".United States Department of State, Georgia: Executive Summary, Retrieved: 5 May 2016 In 2007, the World Bank named Georgia the World's number one economic reformer.World Bank, Georgia , Retrieved: 4 May 2016

Georgia's economy is supported by a relatively free and transparent atmosphere in the country. According to Transparency International's 2018 report, Georgia is the least corrupt nation in the Black Sea region, outperforming all of its immediate neighbors, as well as nearby European Union states. With a mixed news media environment, Georgia is also the only country in its immediate neighborhood where the press is not deemed unfree.Freedom House, Freedom of the Press - 2016, Retrieved: 4 May 2016

Since 2014, Georgia is part of the European Union's Free Trade Area, with the EU continuing to be the country's largest trading partner, accounting for over a quarter of Georgia's total trade turnover.European Commission, Georgia, Retrieved: 7 May 2016 Following the EU trade pact, 2015 was marked by further increase in bilateral trade, whereas trade with the Commonwealth of Independent States (CIS) decreased precipitously.Civil Georgia, Georgia’s 2015 Foreign Trade , 20 January 2016

History

19th century Until the mid 19th century, Georgia's economy was almost entirely based on a feudal system where serfs worked the land for noble landowners known as Tavadis. Even after the abolition of serfdom in Georgia (starting in 1864), the economy remained overwhelmingly rural.

While Georgia remained largely agrarian economy before the 20th century, the country's strategic location and access to the sea provided it with large investments spearheaded by highly influential individuals. Batumi port gained huge interest among the elite class, most notably the Rothschild and Nobel families. Their massive investments in the Baku-Batumi railway and the world's first major kerosene pipeline transformed the city into a global energy hub, connecting the Caspian oil fields to European markets.

By the turn of the century, Chiatura's massive manganese deposits were responsible for huge portion of all global production. By 1913 Chiatura was the main exporter of Manganese ore - supplying 50% of the world markets.

20th-21st Centuries Georgia's modern economy has traditionally revolved around Black Sea tourism, cultivation of citrus fruits (in particular, tangerines), tea and grapes; mining of manganese and copper; and the output of a large industrial sector producing wine, metals, machinery, chemicals, and textiles.Nana Bolashvili, Andreas Dittmann, Lorenz King, Vazha Neidze (eds.): National Atlas of Georgia, 138 pages, Steiner Verlag, 2018,

Like many post-Soviet countries, Georgia went through a period of sharp economic decline during the 1990s, partially due to persistent tax evasion. "During that period, international financial institutions played a critical role in Georgia's budgetary calculations. Multilateral and bilateral grants and loans totaled 116.4 million lari in 1997; they totaled 182.8 million lari in 1998."

Economic recovery had been hampered by the separatist disputes in Abkhazia and South Ossetia, resistance to reform on the part of some corrupt and reactionary factions, and the 1997 Asian financial crisis. Under the leadership of President Shevardnadze (in office 1995–2003), the government nonetheless made some progress on basic market reforms: it liberalized all prices and most trade, introduced a stable national currency (the lari), and massively downsized government.

During the late 1990s more than 10,500 small enterprises had been privatized, and although privatization of medium- and large-sized firms had been slow, more than 1,200 medium – and large-sized companies had been set up as joint stock companies. A law and a decree establishing the legal basis and procedures for state property privatization reduced the number of companies controlled by the state.

The United States began assisting Georgia in the process of reform soon after the country gained independence from the Soviet Union. Gradually, the focus shifted from humanitarian to technical and institution-building programs. Provision of legal and technical advisors was complemented by training opportunities for parliamentarians, law enforcement officials, and economic advisers.

Recent macroeconomic performance Over the last few years, the Georgian economy has been one of the fastest in the FSU. Since 2003's Rose Revolution, the new Government of Georgia implemented broad and comprehensive reforms, that touched every aspect of the country's life. Economic reforms were addressed to liberalization of the economy and provision of sustainable economic growth, based on the private sector development. The establishment of an attractive business environment led to a significant inflow of Foreign Direct Investment in the country, facilitating high economic growth rates.

In 2013, Georgia ranked in the top ten countries in the Emerging Market Energy Security Growth Prosperity Index, according to an article published by CISTRAN Finance news. The index identifies emerging nations that have strong growth potential based on energy reserves and GDP.

Following reforms, Georgia's economy successfully diversified and began showing rapid upward growth, averaging over 10% annual real GDP growth from 2004 to 2007, peaking at 12.3 percent in 2007. Overall, from 2004 to 2007, the economy of Georgia expanded by 35%.

Georgia's economic liberalization policy demonstrated some resilience to the external shocks of the 2008 South Ossetia war and the 2008 financial crisis. Despite this, in 2008, the Georgia economy grew by 2.3%. After contracting in 2009 (−3.8%), the economy recovered soon after, growing 6.3% in 2010 and 7.0% in 2011. The unemployment rate shrunk from 16.9% to 16.3% between 2009 and 2010.

In 2013, the annual inflation rate in Georgia equaled 2.4%. It has been decreased significantly after 11.2% in 2010. Growth of inflation rate was the result of increasing food prices in the world and essential share of the inflation fluctuations came on variability of food prices, as far as the share of food is relatively high in consumer basket of Georgia.

In 2011, IMF estimated current account balance of Georgia was −1.489 BN USD. Georgia has moderate deficits among the European and Transcaucasian Post-Soviet states. The trade with Georgia's major partners continued growing. As an example, in 2017, Georgia exported $87,263,530 worth of products to Armenia, and imported $144,931,920 worth of products from Armenia. Deficits in the current account have been more than offset by strong foreign capital inflows,IMF, Transcript of a Conference Call on Georgia Request for Standby Arrangement September 15, 2008 allowing the Georgian currency to appreciate.

Rank Country Current account balance as a percentage of GDP (2010)IMF, World Economic Outlook Database, April 2012 2011 IMF estimates1 27.662 22.6642 4.807 5.5183 −2.091 −3.8934 −13.873 −11.6975 −15.522 −13.4426 1.835 −1.8607 −8.300 −9.8978 3.565 2.4249 −9.618 −11.70010 −22.938 −8.320

The government has managed to preserve financial stability thanks to the considerable aid provided by the US and international institutions. EBRD analysts believe that substantial international financial support and remittances from workers living abroad will cover the current account deficit in the medium term.EBRD, Georgia economic overview IMF positively evaluated the government's economic policy.

2015 2016 2017 2018 2019* 2020 2021 2022 GDP at current prices, billion GEL 33.9 35.8 40.8 44.6 50.0 49.4 60.0 GDP at constant 2015 prices, billion GEL 33.9 34.9 36.6 38.4 40.4 37.8 41.5 GDP real growth, percent 3.0 2.9 4.8 4.8 5.1 −6.2 10.5 10.8 GDP deflator, percent 5.8 2.6 8.5 4.4 6.6 6.9 10.3 GDP per capita (at current prices), GEL 9 109.4 9 613.9 10 933.9 11 968.0 13 428.9 13 292.7 16 179.5 GDP per capita (at current prices), USD 4 012.6 4 062.1 4 358.5 4 722.0 4 763.5 4 274.6 5 023.2 GDP at current prices, billion USD 14.9 15.1 16.2 17.6 17.7 15.9 18.6

Sectors

Agriculture

Currently, about 55% of the total labor force is employed in agriculture, though much of this is subsistence farming.Main Indicators of Agriculture Development investingeorgia.org

Georgian agricultural production is beginning to recover following the devastation caused by the civil unrest and the necessary restructuring following the breakup of the Soviet Union. Livestock production is beginning to rebound, although it continues to be confronted by minor and sporadic disease outbreaks. Domestic grain production is increasing, and the government invests in improvement of infrastructure improvements to ensure appropriate distribution and revenues to farmers. Tea, hazelnut and citrus production have suffered greatly as a result of the conflict in Abkhazia, a crucial area for planting the latter crops.

Approximately 7% of the Georgian GDP (2011) is generated by the agrarian sector.

Viticulture and winemaking are the most important fields of Georgia's agriculture. Over 450 species of local vine are bred in Georgia, and the country is considered as one of the oldest places of producing top-quality wines in the world. Russia was traditionally the biggest export market for Georgian wine. This, however, changed in 2006, when Russia banned imports of wine and mineral water from Georgia, preceded by statements of Georgian governmental officials about low quality requirements of the Russian market. Since then Georgian wine producers have struggled to maintain output and break into new markets.

In 2011 Georgia sold wine in total amount of 54 mln USD in 48 countries and alcoholic beverages in total amount of 68 mln USD in 32 countries. Vines and alcoholic beverages are in the top 10 export commodity's list with 2,5% and 3.1% share respectively. According to National Wine Agency of Georgia, export of Georgian wine is increasing. 2011 wine export is 109% higher than 2007 exports. According to 2012 information, Georgia trades wine with 43 countries, selling over 23 million bottles. Biggest export partners for Georgia in wine industry are Ukraine (47.3% of wine export), Kazakhstan (18.9%) and Belarus (6.9%). In 2011 export of vines, mineral waters and alcoholic beverages exceeded export of all years after 2006. Georgia is rich with spring waters and production of mineral waters is one of the main spheres of industry. Export of mineral waters in 2011 amounted to 48 mln USD in 35 countries. Share of mineral water in total export is 2.1%. Food processing industry is developing to align with the primary agricultural production and export of processed products is increasing year by year. Export of nuts constituted about 6% of Georgian export (2011) and is among 10 top export commodity list with total amount of 130 mln USD. Nuts was exported in 53 countries.

Rural population as a percentage of total population in Georgia was 48.2% in 2011 and decreased to 46.3% in 2014.

In 2018, in addition to smaller productions of other agricultural products,Georgia production in 2018, by FAO Georgia had produced: 259 thousand tons of grape; 237 thousand tons of potato; 194 thousand tons of maize; 107 thousand tons of wheat; 82 thousand tons of apple; 62 thousand tons of tangerine; 57 thousand tons of barley; 57 thousand tons of watermelon; 51 thousand tons of tomato; 33 thousand tons of cucumber; 27 thousand tons of peach.

Mining

Manufacturing

Construction

Finance