Georgia Economy Finds New Growth Engine With Pivot Toward Global South

Georgia's economy is undergoing a quiet but significant reorientation, with investment and trade flows increasingly tilting toward the Global South as traditional European engagement declines. The shift, driven by a combination of geopolitical tensions with Brussels and opportunistic capital from Gulf states, Turkey, and other non-Western partners, is reshaping the country's economic profile and raising questions about its long-term strategic direction.

The numbers tell a compelling story. International visitor arrivals rose 5.9 percent in 2025, led by tourists from Russia, Turkey, Armenia, Israel, Azerbaijan, and Iran — with only 7-8 percent of visitors coming from the EU and UK. Meanwhile, foreign direct investment from European sources has declined sharply in the first half of 2025, while capital from the United Arab Emirates, Saudi Arabia, and other Gulf states has surged.

"Georgia's economic geography is being redrawn in real time," said a regional economist. "The $6.5 billion Eagle Hills project alone represents a fundamental shift in where Georgia's growth capital is coming from."

The Caspian Post's analysis documented the breadth of the shift, noting that non-Western capital is flowing into real estate, hospitality, aviation, and infrastructure. Etihad Airways has added 14 additional weekly flights to the UAE-Georgia route, and Turkish Airlines continues to expand its Tbilisi and Batumi services, reflecting growing connectivity with non-European markets.

The Georgian government has actively courted this investment. The Hospitality Investment Forum Tbilisi 2026, launched by the Infrastructure Minister, was specifically designed to attract global hotel and resort investors, with a particular focus on Gulf and Asian capital. The government has also maintained a flat tax regime and liberal visa policies that are attractive to investors from emerging market economies.

However, the pivot carries risks. Georgia's EU candidacy, granted in December 2023, has been effectively frozen since Prime Minister Kobakhidze announced a pause in accession negotiations until 2028. This political uncertainty has contributed to the decline in European investment and raised concerns about the country's governance trajectory among Western-oriented business communities.

Moody's has nonetheless raised its forecast for Georgia's economic growth in 2026 from 5.5 percent to 6 percent, reflecting the strength of domestic demand and the impact of large-scale investment projects. The World Bank projects 5.5 percent growth, well above the regional average, driven by tourism revenues that are on track to reach $4.9 billion for the full year.

The U.S. State Department's investment climate statement noted Georgia's strengths in economic freedom, low corruption relative to regional peers, and strategic geographic position, while flagging concerns about judicial independence and the pace of governance reforms. These factors will likely determine whether Georgia can sustain its current growth trajectory regardless of the source of investment capital.

Further Reading

• Georgia Economy Surges 8.8 Percent in February
• Turkey and Georgia Lead Seamless ID Travel Initiative