WOOD Flash – Georgia macro: important elections approaching

The upcoming parliamentary elections in Georgia are scheduled for 26 October, with recent polls indicating a relative majority for the incumbent Georgian Dream (GD). Political tensions are rising ahead of the elections. Prime Minister Kobakhidze has warned of potential disruptions from both opposition groups and foreign influences, while President Zurabishvili has expressed concerns about Georgia's tilt toward Russia under GD leadership, criticising the divisive rhetoric from the party. The Foreign Agent Law implementation is continuing, but with limited NGO compliance. Adding to the complexity, recently, GD unveiled four controversial reform proposals that would require a constitutional majority to implement. Despite the political headaches, the macroeconomic performance remains robust. GDP growth reached 9.6% in 2Q24, driven by lower rates from the NBG and inflation below target, which have supported household consumption. Earlier this year, we revised our GDP forecast upwards, from 5.5% to 6.0%, and we now upgrade our 2024E GDP outlook further, to 8.0%, given the recent data.