Georgia is on course to become one of the world's fastest-growing economies this year following a dramatic influx of more than 100,000 Russians since Moscow's invasion of Ukraine and Vladimir Putin's mobilization drive to drum up war recruits.
As much of the globe teeters towards recession, this country of 3.7 million people bordering the Black Sea is expected to record a vigorous 10% growth in economic output for 2022 amid a consumption-led boom, according to international institutions.
That would see the modest $19 billion economy, well known in the region for its mountains, forests and wine valleys, outpace supercharged emerging markets such as Vietnam and oil exporters such as Kuwait buoyed by high crude prices.
"On the economic side, Georgia is doing very well," Vakhtang Butskhrikidze, CEO of the country's largest bank TBC, told Reuters in an interview at its Tbilisi headquarters.
"There's some kind of boom," he added. "All industries are doing very well from micros up to corporates. I can't think of any industry which this year has problems."
"There's some kind of boom, all industries are doing very well from micros up to corporates. I can't think of any industry which this year has problems."Vakhtang Butskhrikidze
At least 112,000 Russians have emigrated to Georgia this year, border-crossing statistics show. A first large wave of 43,000 arrived after Russia invaded Ukraine on February 24 and Putin moved to quash opposition to the war at home, according to the Georgia government, with a second wave coming after Putin announced the nationwide mobilization drive in late September.
Georgia's economic boom - whether short-lived or not - has confounded many experts who saw dire consequences from the war for the ex-Soviet republic, whose economic fortunes are closely tied to its larger neighbor through exports and tourists.
The European Bank for Reconstruction and Development (EBRD), for example, predicted in March the Ukraine conflict would deal a major blow to the Georgian economy. Likewise the World Bank forecast in April that the country's growth for 2022 would drop to 2.5% from an initial 5.5%.
"Despite all expectations that we had ... that this war on Ukraine will have significant negative implications on the Georgian economy, so far we don't see the materialization of these risks," said Dimitar Bogov, the EBRD's lead economist for Eastern Europe and the Caucasus.
"On the contrary, we see the Georgian economy growing quite well this year, double digits."
Yet the stellar growth is not benefiting everyone, with the arrival of tens of thousands of Russians, many tech professionals with plenty of cash, driving up prices and squeezing some Georgians out of parts of the economy such as the housing rental market and education.
Business leaders also worry that the country could face a hard landing should the war end and Russians return home.
To Georgia with $1 billion
Georgia itself fought a short war with Russia in 2008 over South Ossetia and Abkhazia, territories controlled by Russian-backed separatists.
Now, though, Georgia's economy is reaping the benefits of its proximity to the superpower - the two share a land border crossing - and a liberal immigration policy that lets Russians and people from many other countries live, work and set up businesses in the country without needing a visa.
Furthermore, those fleeing Russia's war are accompanied by a wave of money.
Between April and September, Russians transferred more than $1 billion to Georgia via banks or money-transfer services, five times higher than during the same months of 2021, according to the Georgian central bank.
That inflow has helped push the Georgian Lari to its strongest level in three years.
Roughly half of the Russian arrivals are from the tech sector, according to TBC's CEO Butskhrikidze and local media outlets, chiming with surveys and estimates from industry figures in Russia that pointed to an exodus of tens of thousands of highly-mobile IT workers after the invasion of Ukraine.
"These are high-end people, rich people ... coming to Georgia with some business ideas and increasing consumption drastically," said Davit Keshelava, senior researcher at the International School of Economics at Tbilisi State University (ISET).
"We expected the war to have a lot of negative impacts," he added. "But it turned out quite different. It turned out to be positive."
"These are high-end people, rich people ... coming to Georgia with some business ideas and increasing consumption drastically,"Davit Keshelava
No rooms in Tbilisi
Nowhere is the impact of the new arrivals more evident than in the capital's housing rental market, where increased demand is aggravating tensions.
Rent in Tbilisi is up 75% this year, according to an analysis by TBC bank, and some low-earners and students are finding themselves at the center of what activists say is a growing housing crisis.
Georgian Nana Shonia, 19, agreed on a two-year deal for a city center apartment at $150 a month, just weeks before Russia invaded. In July, her landlord kicked her out, forcing her to move to a rough neighborhood on the edge of the city.
"It used to take me 10 minutes to get to work. Now it's a minimum of 40, I have to take a bus and the metro and often get stuck in traffic jams," she said, attributing the change in market dynamics to the surge of newcomers.
Helen Jose, a 21-year-old medical student from India, has been crashing at her friend's for a month after her rent doubled over the summer break.
"Before it was very easy to find an apartment. But so many of my friends have been told to leave, because there are Russians willing to pay more than us," she said.
University figures have also reported significant numbers of students delaying their studies in Tbilisi because they can't afford accommodation in the city, Keshelava at ISET said.
'The crisis could hit'
TBC's Butskhrikidze said he saw potential in the new arrivals to fill skills gaps in the Georgian economy.
"They are very young, technology-educated and have knowledge - for us and for other Georgian companies this is quite a useful opportunity," he said.
"A key challenge for us is technology. And unfortunately on that side we are competing with high-tech companies in the United States and Europe," he added. "To have a quick win, these migrants are very helpful."
Nonetheless, economists and businesses remain concerned about the longer-term negative effects of the war, and what might happen should the Russians return home.
"We don't build our future plans on the newcomers," said Shio Khetsuriani, the CEO of Archi, one of Georgia's largest real-estate development companies.
Even with rental prices surging, Khetsuriani says development companies are not keen to over-invest in the housing market, especially with prices for materials and equipment increasing. While landlords may be cashing in on surging rents, profit margins for apartment sales have barely shifted, he said.
Economists also caution the boom may not last and are encouraging the Georgian government to use healthy tax revenues to pay down debt and build up foreign currency reserves while they can.
"We have to be aware that all these factors that are driving growth this year are temporary, and it does not guarantee sustainable growth in the following years, so therefore caution is needed," said Bogov at the EBRD.
"Uncertainty is still there and the crisis could hit Georgia with some delay."