NBG Raises 2025 Growth Forecast to 6.7%, Holds Policy Rate at 8% Amid Global Uncertainty

The National Bank of Georgia (NBG) has revised its 2025 economic growth forecast upward from 5% to 6.7%, citing sustained strong economic activity and slower-than-expected normalization of fundamental factors. The updated projection is based on the central scenario of the bank’s Monetary Policy Committee, which met this week and decided to keep the refinancing rate unchanged at 8%.

“In the central scenario, compared to the previous forecast, real GDP growth in 2025 is revised from 5% to 6.7%. In the long term, it is expected to stabilize around the potential level of 5%,” the NBG said in its statement.

The decision to maintain the current policy rate reflects ongoing global economic uncertainty, which presents both upside and downside risks to inflation. The bank cited global economic fragmentation as a potential driver of imported inflation, while the weakening of the U.S. dollar index (DXY) has supported the Georgian lari (GEL), easing the cost of servicing dollar-denominated loans and helping mitigate inflationary pressure.

Global oil prices are also declining due to lower demand expectations and anticipated increases in supply, which—combined with a strong GEL—are contributing to a disinflationary environment.

Domestically, economic fundamentals remain robust. Real GDP growth in the first quarter of 2025 averaged 9.3%, and underlying trends continue to support price stability.

Inflation Outlook and Risk Scenarios

Under its central scenario, the NBG expects inflation to temporarily exceed its target in 2025 due to heightened global uncertainty and domestic trends but to stabilize around 3% in the medium term.

The bank also outlined alternative risk scenarios:

• A high-inflation scenario would require a more restrictive monetary policy, driven by global market volatility, trade fragmentation, and potential disruptions in supply chains.

• A low-inflation scenario could justify lower interest rates, particularly if increased global uncertainty accelerates trade diversification and strengthens Georgia’s role as a “Middle Corridor” logistics hub. In this case, a stronger GEL and weaker dollar would ease imported inflation.

The NBG emphasized that future adjustments to the policy rate will be guided by updated macroeconomic forecasts and ongoing risk assessments.

The next meeting of the Monetary Policy Committee is scheduled for June 18, 2025.