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Discussing the Georgian economy at the Parliamentary session held on 5 February 2014, Chair of the Committee on Budget and Finance, Davit Onoprishvili, stated:

In the previous year, the rate of economic growth exceeded 3%. In the last months, the growth rate took a notable upturn. In October, the indicator reached nearly 4%, in November it was up to 8% and in December the growth rate went beyond 8%. While the United National Movement was increasing pensions by GEL 5 in the past years, the inflation rate reached 10-12% and rendered the increase of pensions void. Whereas now, while the pension increased by GEL 25, the inflation rate of January stood at around 2.9%.”

FactCheck

looked into the indices of economic growth, inflation rates and pensions and set out to check the accuracy of Davit Onoprishvili’s statement.

Graph 1:  Economic Growth Indices (In Percentages)

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The graph shown above presents the statistical data of GeoStat. As can be gathered from the figures, in October the rate of economic growth stood at 4.3%, in November it rose to 8.0% and in December (based upon the preliminary data) the indicator equalled 8.4%. In the fourth quarter of 2013 the average economic growth amounted to 6.9% while the average indicator of the year 2013 (based upon the preliminary data) stands at 3.1%. These numbers confirm the figures indicated by Davit Onoprishvili.

Table 1:  Economic Growth Indices onobolo2

In addition to the abovementioned data we also looked into the economic growth indicators of past years. As becomes evident from Table 1, the annual GDP growth rates observed in the period between 2004 and 2008 were mainly showing a tendency of increase. Starting from 2008, the growth rate took a downturn and in 2009 it was expressed with a negative figure (the year of the Russian-Georgian war and its aftermath). Beginning from 2010, GDP growth rates see an upturn again but in 2012, the figures decrease and this negative trend continues throughout 2013. The annual GDP growth rate registered in 2013 (3.1%) represents the lowest indicator in the last years (with the exception of 2008 and 2009).

As for the average GDP growth rate of the fourth quarter, it also showed a tendency of increase throughout the years 2004-2008. Unlike the annual indicator, the average GDP growth rate of the fourth quarter was expressed with a negative figure only in 2008 (the war took place in the fourth quarter of the year and its impact was manifested in the fourth). It is also to be noted that in the fourth quarter of 2009 the rate of GDP growth equalled zero. Beginning from 2010 the GDP growth rate surges again; in 2012, however, the indicator starts dropping (the period following the parliamentary elections). In the first quarter of 2013 the real GDP growth equalled 2.4%, in the second quarter – 1.5% and in the third quarter the indicator was at 1.4%. The comparison of the indicator registered in the fourth quarter – 6.9% to that of the first, second and the third quarters as well as the fourth quarter of 2012 (3%) indeed points to the revitalisation of the economy. It is to be noted, however, that 6.9% does not represent a particularly high indicator as compared to the indices of the fourth quarters of the past years.

Arguably, the average GDP growth rate of every year is no less than the GDP growth rate of the fourth quarter of the preceding year. The figures given in Graph 1 mainly confirm this assumption. The exceptions from the rule are the years 2008, 2009 (the year of the Russian-Georgian war and its aftermath) and 2012 (the year of the parliamentary elections). Consequently, the given indices suggest that the GDP growth rate of the coming year is expected to be no less than 7% (unless an unexpected impeding factor interferes with the natural flow of the economy).

Graph 2:  Variation of Old Age Pensions onobolo3

Graph 2 reveals that in 2005 the size of old age pensions grew by GEL 14 as compared to 2004; the growth of 2007 relative to the preceding year amounted to GEL 5, in 2008 the indicator increased by GEL 32, in 2009 and 2010 – GEL 5, in 2011 – GEL 20, in 2012 and 2013 – GEL 25 (the blue column depicts the amount of pension given to pensioners aged 67 years or older and the green column – of pensioners below the age of 67 years. This difference between the pensions was introduced in September of 2012 and has been abolished in April of 2013).

It is to be noted that the previous government was planning to increase pensions to the point of GEL 150 as well and this intention was manifested in the draft budget crafted and presented by the preceding central administration.

As can be seen from the data presented above, old age pension saw an average annual growth in the amount of GEL 14 over the course of the last eight years. Of these, growth equalled GEL 5 only in four years; namely, in 2006, 2007, 2009 and 2010. Pensions grew with higher bids in the remaining years. The highest growth in the pension was observed in 2012 and 2013 – GEL 25. Therefore, Davit Onoprishvili’s statement, claiming that pension grew solely by GEL 5 in the past years, is not entirely true.

Graph 3:  Consumer Price Index – CPI (Inflation) onobolo

The above graph shows that the rate of inflation fell within the range of 10-12% only in 2007 (11%) and 2010 (11%). Allowing very rough calculations, it can be estimated that throughout the years 2004-2012 the inflation rate averaged 6%. Consequently, Davit Onoprishvili’s assertion that the inflation rate had reached 10-12% in the past years is mostly false.

In 2004, when old age pension amounted to GEL 14 and the inflation rate equalled 7.5%, pensioners lost GEL 1.05 owing to inflation (14*0.075=1.05). The indices of the following years are presented in the table below.

Year Pension Inflation Rate Pensioners Loss/Gain
2005 GEL 28 6.2% GEL -1.74
2006 GEL 33 8.8% GEL -2.90
2007 GEL 38 11% GEL 4.18
2008 GEL 70 5.5% GEL -3.85
2009 GEL 75 3% GEL -2.25
2010 GEL 80 11.2% GEL -8.96
2011 GEL 100 2% GEL -2
2012 GEL 125 1.4% GEL +1.75
2013 GEL 150 2.4% -3.6%
  Conclusion

Our research about the accuracy of Davit Onoprishvili’s statement revealed that in October the GDP growth rate equalled 4.3%, in November the indicator stood at 8% and the preliminary data of December set the growth rate at 8.4%. The average growth rate of the GDP in the fourth quarter of 2013 amounted to 6.9% while the average yearly growth of the GDP (in line with the preliminary data of 2013) equals 3.1%. The indicator witnessed in the fourth quarter of 2013 – 6.9% – exceeds the indicators recorded in the first, second and third quarters of 2013 as well as the indicator of the fourth quarter of 2012 (3%). Such an upturn observed in the indices points to the revitalisation of the economy. It is also to be noted, however, that the growth of 6.9% registered in the fourth quarter does not represent a particularly high figure as compared to the indices of the fourth quarters of the previous years.

FactCheck

also analysed the second part of Davit Onoprishvili’s statement in which the MP discusses inflation. Our research ascertained that in the course of the years 2004-2012, old age pension saw an increase of GEL 5 only in the years 2006, 2007, 2009 and 2010. Pension was increasing by higher bids in the remaining four years. The highest growth of pension was witnessed in 2012 and 2013 when the growth amounted to GEL 25.

Throughout the years 2004-2012 the inflation rate was within the range of 10-12% only in 2007 (11%) and 2010 (11.2%) while the case when pensioners lost the added amount of GEL 5 and an additional GEL 3.96 was witnessed only in 2010. As for the inflation rate of January 2014, it equalled 2.9%.

Consequently, we conclude that Davit Onoprishvili’s statement, In the previous year, the rate of economic growth exceeded 3%. In the last months, the growth rate took a notable upturn. In October, the indicator reached nearly 4%, in November it was up to 8% and in December the growth rate went beyond 8%. While the United National Movement was increasing pensions by GEL 5 in the past years, the inflation rate reached 10-12% and rendered the increase of pensions void. Whereas now, while the pension increased by GEL 25 the inflation rate of January stood at around 2.9%,” is HALF TRUE.