European Economic Forecast: European Commission upgrades Georgia’s 2026 economic growth forecast to 5.5%

The European Commission has released its updated Spring 2026 European Economic Forecast, reviewing the current economic situation and outlining expectations for the coming years for both EU member states and candidate countries, including Georgia.

The report said that ongoing global conflicts have significantly altered international economic trends and increased uncertainty across major markets.

“A challenging geopolitical environment and US tariff uncertainty continued to weigh on growth, but easing inflation and a robust investment cycle related to the unfolding AI revolution provided important support. The EU economy was likewise strengthening while inflationary pressures were further abating. The conflict materially changed this picture, delivering one of the most significant global energy supply disruptions in recent history”, the report noted.

The document forecasts global growth excluding the EU at 3.1% in 2026 and 3.5% in 2027. Economic growth in the EU is projected at 1.1% in 2026 and 1.4% in 2027.

“Inflation in Central and Eastern Europe is expected to remain higher, reflecting both the region’s greater share of energy in consumption baskets and more dynamic nominal wage growth. In response to higher inflation, the ECB and most other EU central banks are expected to tighten their monetary policy stance or, at a minimum, delay previously anticipated easing measures”, the report said.

Alongside forecasts for EU member states, the report includes economic assessments and projections for candidate countries. In the section dedicated to Georgia, the Commission revised upward the country’s 2026 economic growth forecast to 5.5%, compared to the 5.3% projection contained in the Autumn 2025 report.

“Following another year of economic expansion in 2025, Georgia’s GDP growth is projected to decelerate but to remain robust at 5-5.5% in 2026 and 2027. The impact of the conflict in the Middle East on growth is likely to be relatively limited and is channelled mainly through higher energy prices. Services, such as ICT, education and tourism, are expected to be the main drivers of growth”, the report stated.

According to the Commission, Georgia’s economy remained very strong in 2025, recording 7.5% growth despite slowing slightly from the 9.7% growth recorded in 2024.

On the supply side, growth was primarily driven by the services sector, especially ICT and education, as well as manufacturing, while agriculture and mining made negative contributions. Increased surpluses in services and rising remittances also helped narrow the current account deficit to 2.7% of GDP in 2025.

“Looking ahead, growth is set to reach 5-5.5% in 2026 and 2027, in line with its long-term potential. Economic activity is expected to remain driven by private and public consumption, supported by continued, albeit slower, increases in real wages, strong consumer lending and inflow of remittances”, the report said.

Regarding inflation, the Commission said price growth would remain relatively elevated in 2026 due to higher fuel and energy prices before gradually declining in 2027 toward the target level of 3%.

The report further highlighted Georgia’s successful issuance of $500 million in Eurobonds at a 5.125% coupon rate.

“In January 2026, Georgia successfully rolled over USD 500 million of maturing Eurobonds, at a low 5.1% interest rate”, the report concluded.