At the plenary session of the Parliament of Georgia, held on 13 November 2013, Chairman of the Budget and Finance Committee Davit Onoprishvili stated: “A decline in the GDP [growth rate] started in the summer of 2012 when the Georgian Dream was still engaged in the pre-election campaign. This fact has been pointed out by the International Monetary Fund representatives on multiple occasions. The quarterly downturn took a start during your governance and the current situation is a result of these events. And secondly, the 6% [real GDP growth rate] was accorded with the International Monetary Fund and, generally, the forecast for the world and the region was more favourable and the IMF goes astray in its projections as well. The economy is characterised with a cyclic nature, sometimes with bigger growth and other times smaller. This is a usual process and there is no country in the whole region where the GDP [growth rate] has not dropped and the drop in other countries was much greater than in Georgia.”
FactCheckset out to verify if the decrease of the GDP (Gross Domestic Product) growth rates had indeed started in the summer of 2012, whether or not this tendency had been confirmed by the International Monetary Fund, if the projected growth rates for 2013 had truly been lower than those for 2012, and if the International Monetary Fund’s projections with regard to the countries of the region and the world had indeed been lowered.
In line with the data of GeoStat, in the first quarter of 2012 the real GDP growth rate amounted to 6.6% while in the second quarter the indicator was at 8.2% and in the third quarter – at 7.5%. Accordingly, the GDP growth rate of the third quarter fell by 0.7% relative to the second quarter but it still surpassed the indicator of the first quarter.
The fluctuation of 1-2% in the GDP growth rates of different quarters is a normal occurrence if the decline of growth rates does not take the form of a tendency.
A notable drop is observed in the indicators of the fourth quarter of 2012 and in the three quarters of 2013 (respectively, 3%, 2.4%, 1.5% and 1.3%) which significantly fall behind the indices of the third quarter of 2012; therefore, the downturn in the real GDP growth rates assumed the form of a tendency in the fourth quarter of 2012.
It is also to be taken into consideration that the third quarter of 2012, which covers the period between July and September, coincided with the pre-election period and a waning of the economic activity in this period (especially an insignificant one, from 8.2% down to 7.5%) is within normal occurrence. The same could have been said for the fourth quarter of 2012, as for a transitional period after the change of the government, if the dwindling of the economic growth rates had not taken the form of a tendency and stretched over the period of nine months of 2013.
FactCheck’s correspondent at the Parliament, Davit Liklikadze, sought to ascertain which report of the International Monetary Fund or statement of the organisation’s representative served as the basis for Davit Onoprishvili’s assertion that the decline in economic growth rates had started in the summer of 2012. For this reason our representative addressed the MP personally with a question. Davit Onoprishvili responded that he had not read this fact in a report of the IMF but pointed out to us the explanatory note of the 2013 state budget of Georgia submitted to the Parliament by the Government on 1 October 2012. At the moment of submission the United National Movement still represented the governing party.
The explanatory note reads: “Over the past eight months [of 2012,] the real GDP growth rate reached 7.5% while the GDP deflator amounted to 0.3% considering these indicators, the projected yearly GDP growth rate will be set at 7.0% while the forecast for the GDP deflator will be at 2.0%. Taking into account the ongoing tendencies in the world economy, in accord with the International Monetary Fund, the projection for the fiscal and macroeconomic indicators of the following year will once again be set within conservative margins with the projected GDP growth rate for 2013 equal to 6.0%and the GDP deflator at 4.5%.”
Therefore, during the previous government, the real GDP growth rates were indeed projected to decline in 2013 but the final economic growth rate of 2012 and the present forecast for the economic growth of 2013 are significantly lower than the figures in the document indicated by Davit Onoprishvili. In accordance with the document, the yearly real GDP growth rate for 2012 was projected to equal 7% whereas the real growth amounted to 6.2%. In the same document, the Government of Georgia foreshadowed an economic growth of 6% in 2013. In October of 2012, the forecast of the IMF for the economic growth of 2013 was equal to 5.5% whereas in October of 2013, the prognosis of the IMF fell to 2.5%.
We also checked the validity of Davit Onoprishvili’s statement: “There is no country in the whole region where the GDP [growth rate] has not dropped and the drop in other countries was much greater than in Georgia.”
As gathered from the dataof the International Monetary Fund, the real GDP growth rates declined in some countries of the region (for instance, Russia and Armenia) although there were many countries (such as Azerbaijan, Moldova, Turkey, Ukraine) which were characterised with the opposite tendency.
We also checked the accuracy of Davit Onoprishvili’s assertion that last year’s IMF forecasts with regard to the economic growth of 2013 in the region and the world as a whole were much more optimistic than today. According to the official website of the International Monetary Fund, in 2012 the IMF projected the average real GDP growth rate in the world in the amount of 3.6% while in 2013 the forecast indicator sank to 2.9%. Of the countries of the region, economic growth indicators were lowered for Moldova, Russia and Ukraine but raised for Armenia, Azerbaijan and Turkey.
Conclusion
In the third quarter of 2012, the real GDP growth rate of Georgia was lower than in the second quarter and amounted to 7.5% which is a fairly normal indicator as compared to the same indices of the previous years. In the fourth quarter of 2012, the GDP saw a growth of solely 3% which is the lowest indicator since 2009. The tendency of decline continued further to the point when the projected economic growth rate for the third quarter of 2013 was estimated at 1.3%. Therefore, the tendency of a decline in the real GDP growth rates took its start in the fourth quarter of 2012.
In private conversation, Davit Onoprishvili informed us that the fact of a declining tendency in the real GDP growth rates having started in the third quarter of 2012 was not read by him in the report of the International Monetary Fund but he pointed out the explanatory note of the 2013 state budget presented to the Parliament on 1 October 2012 as the source of this information. The document confirms that in accord with the International Monetary Fund, the projected economic growth rates for 2013 were reduced to 6% (growth rates for 2012 were forecast to amount to 7%). Pursuant to the prognosis of the IMF published in October of the current year, however, in 2013 the GDP of Georgia is growing by 2.4% which is notably less than the indicators projected in the last year.
Davit Onoprishvili misleadingly states that: “There is no country in the whole region where the GDP [growth rate] has not dropped and the drop in other countries was much greater than in Georgia.”The majority of the countries of our region registered an upturn in their economic growth rates.
In October of 2012 the International Monetary Fund’s average projections for the world with regard to the real GDP growth rates of 2013 were more optimistic than those made in October of 2013 but in certain countries of the region (Armenia, Azerbaijan, Turkey) the projected indicators saw an increase.
We conclude that Davit Onoprishvili’s statement: “A decline in the GDP [growth rate] started in the summer of 2012 when the Georgian Dream was still engaged in the pre-election campaign. This fact has been pointed out by the International Monetary Fund representatives on multiple occasions. The quarterly downturn took a start during your governance and the current situation is a result of these events. And secondly, the 6% [real GDP growth rate] was accorded with the International Monetary Fund and, generally, the forecast for the world and the region was more favourable... There is no country in the whole region where the GDP [growth rate] has not dropped and the drop in other countries was much greater than in Georgia,” is MOSTLY FALSE.
