Georgia is riding an FX wave to its smallest current-account deficit ever

CAUCASUS / CENTRAL ASIA - In Brief 14 Jul 2026 by Ivan Tchakarov

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Georgia's external story has its own defining characteristics, centered around the steady inflow of foreign exchange in the face of complex political relations with the West. The CA registered a deficit of US$356.0mn in 1Q26 on the back of the US$631.1mn deficit posted in 1Q25 and the US$482.5mn gap in 4Q25 (Graph 1). There is a strong seasonality in the data as the second and third quarters tend to be stronger from the point of view of tourist arrivals, which improves current account performance. The 4-q rolling CA gap has thus come to US$0.75bn or only 1.8% of GDP (2.6% of GDP in 4Q25). This is a historical low for the country. The CA deficit has generally improved significantly since 2021, with the 2025 external gap equaling 2.8% of GDP (vs 5.4% of GDP in 2024, 5.7% of GDP in 2023, 4.7% of GDP in 2022 and 10.8% of GDP in 2021). The better performance over the last four years has been chiefly related to the much more robust net inflows in services (tourism and related services) and secondary income, in turn facilitated by strong remittances from the US, Italy and Russia. At the same time, the trade deficit has stabilized over the last couple of quarters, although it remains at an elevated level due to still strong GDP growth. Graph 1 CA gap has narrowed substantially in recent years Source: Central Bank, Author's calculations The improving CA has also helped generate a surplus on the BoP.  The significant reduction of the CA gap has been instrumental in pushing the BoP in surplus since 2025 despite reduced inflows on the financial account over the last couple of years, which, in turn, has been drive by political controversies surrounding the latest political cycle in...