The European Bank for Reconstruction and Development has left its for Armenia and Azerbaijan unchanged while raising its projection for Georgia.

The EBRD expects Armenia’s economy to grow by 5.5% in 2026, the same forecast issued in June. Azerbaijan’s growth forecast remains at 2.0%. Georgia’s projection was raised by 0.5 percentage points to 6.5%.

The EBRD’s latest assessment puts Georgia’s real GDP growth at 7.9% year on year in the first half of 2026, although the pace slowed from 9.0% in the first quarter to 7.0% in the second. Growth was spread across several sectors, with information and communication services, manufacturing, transport and warehousing, and financial and insurance activities among the main contributors.

Georgia’s exports of goods increased by an estimated 20% in the first half of the year, compared with 2.3% growth in imports. Tourism receipts, however, fell by 2.0% year on year. Inflation reached 5.6% in August, above the National Bank of Georgia’s 3% target, with higher energy prices contributing to inflationary pressure.

The country’s external position also improved. The current account deficit narrowed to 1.9% of GDP in the first quarter on a four-quarter rolling basis, from 6.0% a year earlier. International reserves reached a record $8.1 billion by the end of August, equivalent to 128.2% of the International Monetary Fund’s reserve adequacy benchmark.

The EBRD expects Georgia’s economy to expand by 5.5% in 2027, with large investment projects in real estate, transport infrastructure and renewable energy identified as potential sources of additional growth.

For Armenia, EBRD maintained its 5.5% growth forecast for 2026. Azerbaijan’s economy is expected to expand by 2.0%, also unchanged from the June outlook.

The latest projections point to different growth profiles across the South Caucasus, with Georgia maintaining the highest forecast among the three countries while Armenia and Azerbaijan remain on the same trajectory as in the EBRD’s previous outlook.