According to the latest data from the Statistics Office of Georgia, the non-observed economy (NOE)—commonly referred to as the shadow economy—accounted for 13.6% of the country’s gross domestic product (GDP) in the second quarter of 2025. This marks a slight decrease of 0.1 percentage points compared to the same period in 2024.

The non-observed economy includes economic activities that are not captured by official statistics, often because they are unregistered or intentionally hidden to avoid taxation and regulation. Examples range from informal repair services and private tutoring to unregistered sales by small-scale farmers.

Historical data shows a notable reduction in the size of the shadow economy over the past 15 years. In 2010, the NOE made up 23.1% of GDP. By 2015, it had dropped to 13.6%, and since then, it has fluctuated between 12% and 13%.

Sectoral breakdowns reveal significant variation in the prevalence of non-observed activity. As of Q2 2025:

The “other services” category—encompassing services not classified elsewhere—has the highest share of non-observed activity, reaching 72.2% of GDP within that sector.

The accommodation sector, including hotel operations and short-term rentals, follows with 51.6% of its turnover estimated to be non-observed.

The health sector ranks third, with 19.2% of GDP stemming from unregistered services, such as informal medical consultations and treatments.

The data highlights ongoing challenges in formalizing economic activity, particularly in service-based sectors, despite long-term improvements in transparency and regulation.