On 30 October 2015, after the finalisation of the presentation of the International Monetary Fund Regional Economic Review, the Minister of Economy and Sustainable Development of Georgia, Dimitri Kumsishvili, stated: "According to the forecast of the International Monetary Fund, Georgia, as a reformer country, will have one of the highest economic growth rates in the region in the period of 2016-2017."
FactCheckverified the accuracy of the aforementioned statement.
The World Economic Outlook (WEO),published twice a year, is a study conducted by the International Monetary Fund which assesses the medium and long-term perspectives of economic development. The most recent of the Reports was published in October 2015. Chart 1 reflects the expected economic growths of Georgia and its neighbouring states as assessed by the International Monetary Fund.
Chart 1:
Expected Economic Growth in Georgia and other Countries of the Region
Source: International Monetary Fund
As the above chart makes clear, according to the 2016 forecast data, Georgia holds the 5th
place among the 13 countries of the region by its expected economic growth rate. According to the forecast data of 2017, however, it is only behind Turkmenistan and Uzbekistan. Among the bordering states, Georgia holds the first place by the expected economic growth rate in 2016 and 2017.
However, it should be pointed out that a 3% to 5% economic growth rate is not very high for a country with a developing economy. In addition, both Russia and Ukraine are, in fact, in a state of war which has obvious negative effects upon their economies. In the case of Russia, the international sanctions and the shock caused by the decrease in petrol prices must also be taken into account with this same shock having been experienced by Azerbaijan as well. It should also be noted that, due to the extent of economic integration, the economic problems in Russia have a much more serious influence upon the economies of Armenia and Belarus than upon the economy of Georgia. Turkey also faces considerable domestic and external challenges which have a negative influence upon its economy. In addition, the Turkish economy is much more developed than is the Georgian economy. Hence, given the basic effect, the Georgian economy must be growing with a higher rate than a much more developed Turkish economy. FactCheck wroteabout this issue earlier as well.
It should be taken into account that the forecast of the International Monetary Fund about the expected developments in the political and economic fields is based upon the current state of affairs and a set of assumptions. The forecast data are being reviewed according to new developments in specific countries, regions or the world economy in general.
Chart 2:
Georgia’s Forecast and Real Economic Data from 2011 to 2017 (2012 and 2015 International Monetary Fund Reports)
Source: International Monetary Fund
As Chart 2 reflects, the 2015-2017 forecast data are significantly different from those given in the October 2012 Report. In addition, the actual data from 2012-2014 do not coincide with the forecasts of the 2012 Report. The difference is always negative. Only in 2011 was the deviation positive and Georgia had a higher economic growth than was expected. Apart from the processes in the region, the direction of the deviation from the forecast data also depends upon the economic policies of the country.
Conclusion According to the forecast data published by the International Monetary Fund, Georgia’s economy will grow by 2.96% and 4.95% in 2016 and 2017, respectively. This is the highest growth rate among its neighbouring countries. Among the 13 countries of the wider region, Georgia will hold the 5th place in 2016 and the 3rd
place in 2017.
Georgia’s position in the rating can mostly be explained by the economic problems in the countries in the region. In addition, the forecast rate for Georgia’s economic growth is not very high for a country with a developing economy.
FactCheck concludes that Dimitri Kumsishvili’s statement is MOSTLY TRUE.
