Georgian Dream leaders are trying to project an image of business as usual for the country’s economy amid an intensifying political crisis. But their words aren’t matching reality, as markets are responding poorly to authorities’ reliance on forceful tactics to contain protests. 

Since the surprise government announcement on November 28 that Georgia would be halting EU accession talks until at least 2028 – enraging citizens and sparking street protests across the country – key economic indicators have soured. 

Shares of the country’s two largest banks, TBC and the Bank of Georgia, remain down a week after the announcement. The Georgian lari immediately lost value, with Bloomberg reporting on December 5 that the currency had hit its lowest point against the US dollar in two years.

With protests showing no sign of letting up, officials are bracing for the challenge of ensuring long-term economic stability. Prime Minister Irakli Kobakhidze used a December 3 briefing to laud Georgia’s economic growth and dismiss concerns that the ongoing political crisis would destabilize markets. He went as far as claiming, without evidence, that the protesters wanted to sow economic chaos.

“Creating problems for the lari and the economy has indeed been one of the goals of the radical opposition, but they did not succeed,” he said.

A few days later, Kobakhidze again tried to assure the business community that any setbacks are temporary. “The peaceful and stable development of our country will continue,” Kobakhidze said on December 5.

Referring to earlier bouts of uncertainty, such as protests in earlier 2024 connected with the government’s adoption of a so-called ‘foreign agents’ law, the prime minister claimed that markets and exchange rates can quickly rebound. “As you know, such processes can sometimes lead to short-term fluctuations,” he said. “There was a temporary impact on the exchange rate of the lari. However, as soon as the violence ceased, the rate began to decline.”

The current protest wave seems to have assumed a more intense dynamic than previous bouts of unrest. Many involved believe the country’s geopolitical future is at stake: the government seems intent on guiding the country back into Russia’s orbit, embracing an illiberal governing style championed by countries like Hungary, while the overwhelming majority of the population favors a Western future.

The winner-take-all nature of the current crisis is prompting entities and individuals who normally would remain neutral in such political disputes to speak out. Some government officials have expressed their opinion by resigning.

Some business entities, meanwhile, have gone public with concerns that the country is headed in the wrong direction. In a statement posted to Facebook on November 30, for example, the Bank of Georgia appeared to back Georgia’s protest movement: “For the Bank of Georgia, whose name has a special burden, there is no alternative to the country’s road towards Euro-integration.”

Back in May, amid protests against the ‘foreign agents’ law, the national bank had to sell off millions in reserve currency to ensure fiscal stability. Some observers worry that the central bank now lacks the resources to respond to a protracted bout of uncertainty.

Speaking in parliament on December 5, the director of the National Bank of Georgia, Natia Turnava, claimed central bankers had “all necessary tools” to intervene and stabilize currency markets, if needed.