Deteriorating Business Environment in Georgia: Contradictory Business Stats Suggesting a Downtrend
Georgia's Business Landscape Screams Red Alert, Warns Larisa Pataraia
Alarm bells are ringing for businesses in Georgia, according to Larisa Pataraia, Managing Partner of Start-Business Solutions. In a down-to-earth chat with BMGTV, Pataraia painted a grim picture of a rapidly deteriorating business environment, with a significant drop in investor interest and a visible slowdown in economic activity that isn't reflected in headline statistics.
"I'm sorry to say it, but without a doubt, we're gonna see no new investors stepping in the door come 2025," Pataraia stated, adding that new projects make up less than 10% of her firm's portfolio this year, and they've mostly pivoted to crisis management services to help clients bolster sales, slash costs, and streamline operations.
With roots dating back to 2013, Start-Business Solutions has been a trusted partner in the Georgian market, offering services such as market research and strategic consulting with a focus on diversification and investor attraction. However, Pataraia notes that their role has drastically changed given the gloomy business sentiment.
"Businesses have come to us for expansion and investment opportunities in the past. Now, cutting costs has become imperative, for both small and large businesses alike," she explained.
Certain sectors are grappling with immense pressure, Pataraia noted, with tourism, hospitality, and retail sectors taking quite a beating.
"Take a look around, and you'll see restaurant closures and shuttered tourist facilities due to a shortage of bookings. Clothing companies are also grappling – while large-scale businesses are adapting, smaller companies are teetering on the brink of crisis," she elaborated.
To gain a clearer picture of the current business climate, Start-Business Solutions intends to reproduce a survey they conducted in December to assess market forecasts. Pataraia pointed out signs of distress among SMEs, as evidenced by the increase in loan restructuring and rehabilitation cases.
" Politics are adding fuel to the fire," Pataraia emphasized, pointing to recent legislative shifts and Georgia's shift away from its Euro-Atlantic trajectory as significant hindrances to foreign investment.
"If Georgiacontinues on this path and abandons its Euro-Atlantic course, we'll not only fail to attract new investors, but existing businesses will struggle to survive," she predicted.
It's worth noting that while macroeconomic data suggests that Georgia's economic activity is still robust, but its growth rates have slowed. The year-on-year GDP growth dipped from 9.0% in March 2025 to 7.5% in April 2025, mainly due to declines in the construction and manufacturing sectors. The real GDP growth was 9.4% in 2024, primarily driven by consumer spending, tourism recovering to pre-Covid levels, and strong ICT and transport sectors. Inflation climbed to 3.5% year-on-year in May 2025 due to food price increases, but core inflation remains relatively low, and monetary policy remains steady. The overall growth rate is expected to slow to 7.2% in 2025 before settling around 5% in the long term.
Despite these figures, investor sentiment and the realities on the ground suggest a more cautious or deteriorating business environment in practice this year.
The situation in Georgia's business landscape is dire, as Larisa Pataraia predicts that no new investors will be stepping in come 2025. In light of this, Start-Business Solutions, a firm known for its focus on diversification and investor attraction, has shifted its focus to crisis management services, indicating a paramount concern for businesses to cut costs.
Given the current business climate, Start-Business Solutions will conduct a survey to reassess market forecasts, as Pataraia has observed signs of distress among small and medium-sized enterprises, including an increase in loan restructuring and rehabilitation cases.
