Delivering a speech at the plenary session of the Parliament of Georgia on 13 November 2013, the Minister of Finance of Georgia Nodar Khaduri stated: “Construction is the only field seeing a downturn. But it is to be said that a decrease of 40% was observed solely in the construction performed with the participation of the government. These are the expenditures related to the construction of buildings such as this one [the Parliament]. Private construction grew by 10% and, considering the fields individually, an upturn has been observed in multiple sectors over nine months.”FactCheck
took interest in the indicated statement of the Minister of Finance and set out to check its accuracy.
In accordance with the data of the National Statistics Office of Georgia, in the first six months of 2013 the production value in the construction field fell by 13.9% while in the first nine months the fall amounted to 27.6%. According to the types of ownership, GeoStat distinguishes two categories of construction production: construction funded by the private sector and construction funded by the government. In the first six months of 2013, the production value of the construction financed by the private sector decreased by 13% while in the first nine months the decrease amounted to 26%. The production value of the construction funded by the government dropped by 85.1% in the first six months while in the first nine months, the indicator fell by 74.7%.It is also to be noted, however, that the production value of the government-funded construction is much less than that of the private construction.
As for the growth in other fields of economic activity, GeoStat has published data for only six months of 2013 so far which indeed demonstrates growth in certain economic sectors. For instance, real growth in trade amounted to 6.3%, in financial intermediation – 7.8%, in education – 4.1%, in mining and quarrying – 7.9%, in agriculture and forestry – 8.7% and so forth (the table below does not include the full list of economic sectors).
Along with the growth of economic sectors, the extent of the growth rate should also be taken into consideration as it contributes to the overall economic growth rate of the country.
In 2013 the field of agriculture was characterised with high growth rates relative to previous years. High growth rates were observed in the sectors of mining and education as well. Based upon the data of the last three years, the following sectors were characterised with declining growth rates: electricity, gas and water supply, healthcare and social assistance, communication, hotels and restaurants, trade and repairs, and financial intermediation. While some of these still preserved high growth rates, others had growth rates expressed with negative figures (downturn): transport, healthcare and social assistance.
inquiry about the accuracy of Nodar Khaduri’s statement revealed that a downturn was observed not only in the government-funded but also in private construction. The government-funded construction saw a decrease roughly twice as large as claimed by the Minister. It is also to be mentioned that the share of government-funded construction is so small as compared to that of the private sector construction that even in the case of a 40% decrease in government construction (provided the private sector construction grows by 10%) this would not have a notable impact upon the overall decline in the growth rate of construction, let alone bring it down to a negative figure. The same is confirmed by the rates of decline in the overall construction and private construction in particular (respectively, 27.6% and 26.9%), which are very close to each other.
As for the growth in other fields of economic activity, many sectors indeed registered a tendency of growth, but not all. Consideration is also to be given to the size of the growth rates as precisely high growth rates of large sectors inflict high growth rates of the economy on a whole.Consequently, we conclude that Nodar Khaduri’s statement, “Construction is the only field seeing a downturn. But it is to be said that a decrease of 40% was observed solely in the construction performed with the participation of the government. These are the expenditures related to the construction of buildings such as this one [the Parliament]. Private construction grew by 10% and, considering the fields individually, an upturn has been observed in multiple sectors over nine months,” is MOSTLY FALSE.