World Bank Lifts Georgia to 7%, Cuts Azerbaijan to 1.2%

The World Bank has raised its 2026 growth forecast for Georgia to 7%, two percentage points above its June projection, lifted Armenia to 5.6% and cut Azerbaijan to 1.2%, according to the October 2026 edition of its Europe and Central Asia Economic Update. Azerbaijani and Georgian media first reported the figures on 6 and 7 October 2026, so they represent the bank's latest outlook rather than a new release.

The update sharpens a split that other lenders have also flagged. The bank expects the South Caucasus as a whole to grow 3.5% this year, Report said, citing the update, but the gap between the region's fastest and slowest economies is now 5.8 percentage points. Services, particularly information and communication technology, transport and tourism, remain the main engine of regional growth, while Azerbaijan's shrinking oil output keeps pulling the average down.

For businesses and lenders, the practical point is that the three economies are no longer moving together. Georgia and Armenia are being carried by services and construction; Azerbaijan's prospects depend on how quickly non-oil activity can offset falling hydrocarbon production.

The forecasts at a glance

• Georgia: 7% in 2026, 5.5% in 2027 and 5% in 2028. The bank's June forecast for 2026 was 5%.
• Armenia: 5.6% in 2026, 5.3% in 2027 and 5.1% in 2028, up from 5.3% and 5.1% for 2026 and 2027 in the bank's previous forecast.
• Azerbaijan: 1.2% in 2026, 0.8 percentage points below the April forecast, then 1.8% in 2027 (unchanged) and 1.9% in 2028.
• South Caucasus: 3.5% in 2026.
• Europe and Central Asia: 2.2% in 2026, down from 2.6% in 2025, SteelOrbis reported.

Georgia: a bigger number, built on fading supports

The upgrade largely brings the forecast into line with what has already happened. The bank put Georgian growth at 7.5% in 2025 and 7.6% in the first eight months of 2026, News.az reported. CBJ reported earlier that the economy grew 7.8% in the first half of 2026, with information and communication technology the largest single contributor.

The bank's commentary is more guarded than the headline figure. It said the boost from car re-exports, a major driver of Georgia's external trade in recent years, is fading, and that the effect of earlier migration waves and related remittance inflows on household consumption is gradually weakening. The conflict in the Middle East has also reached tourism: receipts from visitors from Israel and Saudi Arabia fell 12% in the first half of the year, according to the bank's figures as reported by Report and News.az. Those factors explain why the bank sees growth easing to 5.5% next year and 5% in 2028.

The government has welcomed the revision. Prime Minister Irakli Kobakhidze told a government meeting that the new figure compared favourably with other countries seeking EU membership. "This forecast is 2.6 times higher than the average for other EU candidate countries," he said, Georgia Today reported on 7 October 2026. The bank's own path, however, shows growth slowing after this year rather than holding at 7%.

Armenia: construction and services keep growth above 5%

For Armenia, the bank lifted its 2026 forecast to 5.6% from the 5.3% it had carried since June, a figure CBJ reported at the time. In July, World Bank senior economist Armine Manukyan said the bank would review its macroeconomic assessment in September and could revise it, ARKA reported. Axar.az reported that the bank now links Armenia's expansion to a strong increase in housing and infrastructure construction.

Other autumn forecasts point the same way. The Eurasian Fund for Stabilization and Development (EFSD) raised its 2026 projection for Armenia to 5.8% from 5.5% in its autumn Regional Economic Outlook, ArmBanks reported on 13 October 2026, and expects 5.1% in 2027. The Asian Development Bank (ADB) was more cautious in September, keeping Armenia at 5.0% for 2026. Armenia's own 2026 state budget assumes 5.4%.

Azerbaijan: oil decline and lower state spending

The bank attributed Azerbaijan's downgrade to three factors: a continuing structural decline in the oil sector, reduced public capital expenditure, and weaker than expected growth in the non-oil economy, according to Report, News.az and Axar.az. The economy grew 1.4% in 2025.

Official data published after the update show the same pattern. Gross domestic product rose 1.5% year on year in January to September 2026 to about AZN 102.05 billion ($60.03 billion), the State Statistical Committee said, as reported by Report and Trend. Oil and gas output fell 1.2%, while the non-oil economy grew 2.6%. Trading Economics noted that the oil and gas contraction deepened from 0.8% in January to August.

The World Bank is now the most cautious of the major forecasters on Azerbaijan. The IMF's October World Economic Outlook projects 1.7% for 2026 and 2.3% for 2027, Trend and APA reported on 13 October 2026. The European Bank for Reconstruction and Development (EBRD) kept 2% for 2026 and 2.5% for 2027 in its September Regional Economic Prospects, and the ADB cut its 2026 figure to 1.6% from 2.0% in September. All four institutions put Azerbaijan's growth this year at 2% or less.

How the lenders compare for 2026

• Georgia: World Bank 7%; ADB 6.3% (September).
• Armenia: EFSD 5.8%; World Bank 5.6%; ADB 5.0%.
• Azerbaijan: EBRD 2%; IMF 1.7%; ADB 1.6%; World Bank 1.2%.

What to watch

• Georgia's monthly growth estimates for the rest of 2026, to see whether activity holds near 7% as the re-export and remittance effects identified by the bank continue to fade, and whether tourism receipts from the Middle East recover.
• Azerbaijan's non-oil growth, which reached 2.6% in nine months. Faster non-oil expansion or a slower oil decline would favour the higher IMF and EBRD numbers; another weak quarter would support the World Bank's call.
• Public investment in Azerbaijan. The bank cites lower state capital spending as a drag, so the capital programme in the 2027 budget will shape next year's forecasts.
• Armenia's construction cycle, which the bank identifies as a key driver. A slowdown in housing and infrastructure would put the 5.6% figure at risk, while the EFSD's 5.8% suggests some lenders still see upside.

FAQ

When was the World Bank forecast published?

The figures come from the October 2026 edition of the World Bank's Europe and Central Asia Economic Update. Report first cited it on 6 October 2026; Georgia Today and News.az followed on 7 October and Axar.az on 9 October.

Why did the World Bank raise Georgia's forecast to 7%?

Growth has run ahead of earlier projections, reaching 7.6% in the first eight months of 2026 by the bank's count. The bank still expects a slowdown to 5.5% in 2027 as the effects of car re-exports and migration-related remittances fade.

Why is Azerbaijan's forecast so low?

The bank cites a structural decline in oil production, lower public capital spending and weaker than expected non-oil growth. Official data show oil and gas GDP down 1.2% in the first nine months of 2026.

Is the World Bank out of line with other forecasters?

On Georgia it is above the ADB's September figure of 6.3%, and on Azerbaijan it is the lowest of the four lenders cited here. Its 5.6% for Armenia sits between the ADB's 5.0% and the EFSD's 5.8%.

Sources: Report, 6 October 2026; Report, 6 October 2026; News.az, 6 October 2026; Georgia Today, 7 October 2026; Georgia Today, 7 October 2026; News.az, 7 October 2026; SteelOrbis, 8 October 2026; Axar.az, 9 October 2026; Report, 9 October 2026; Trend, 9 October 2026; Trading Economics, 9 October 2026; ArmBanks (ARKA), 13 October 2026; Trend, 13 October 2026; APA, 13 October 2026; Caspian Post, 28 September 2026; Report, 24 September 2026; ARKA, 29 July 2026