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On 7 March 2014 the news agency Pirveli

published the following statement of the Prime Minister of Georgia, Irakli Gharibashvili:  “Georgia tripled the volume of its export to Russia. In general, I believe that at this stage it is rather improbable for Russia to proclaim another unprovoked embargo on Georgia. Even if we allow the hypothetical possibility of such an occurrence, the impact today would not be as grave as it was in 2006. At that time, the Georgian market was exceedingly dependent upon Russia but since then, we have diversified the economy and expanded into new markets. Take Europe, for instance, where over the past year our export to the European market has grown by 65%. This is an unprecedented indicator.”

FactCheck

inquired about the accuracy of the given statement and verified its accuracy.

Table 1.  Trade between Georgia and Russia (USD thousand) image001 Source:  National Statistics Office of Georgia – geostat.ge As can be gathered from Table 1, over the period of 2003 to 2006 Georgia’s export to Russia was characterised by a tendency of growth. In 2006 (following the embargo) the volume of export saw precisely a twofold decline as compared to 2005. From 2006 to 2010 the export indices were decreasing whereas in the period spanning 2010 to 2013, the indicators reveal the trend of an increase. As the Prime Minister’s assertion regarding the triple growth of export is rather vague (it is unclear against which year the PM is comparing the export indicator of 2013) we analysed several possible interpretations of the statement which logically proved to be most plausible. Comparing the volume of export registered in 2013 (preliminary data) to that of 2012 we observe that the volume of export grew 4.2-fold in 2013 which bolsters Irakli Gharibashvili’s claim about the tripling of the volume of export. In the case if we compare the indicator of 2013 to that of 2006 (the period of imposed embargo and a sharp decline in the volume of export), we observe that the volume of export saw approximately a threefold upturn which again confirms the number indicated by the Prime Minister. However, setting the indicator of 2013 against that of 2005 (the highest indicator of export to Russia prior to the introduction of the embargo), and this is considered by FactCheck

as the most logical comparison, it becomes evident that the volume of export surged solely 1.2-fold in 2013. This rate of growth is much lower than the figure named by the Prime Minister but it is nevertheless to be noted that in 2013 (preliminary data) the export indicator reached the highest mark yet.

As for the volume of goods imported from Russia, it revealed a tendency of growth in the period from 2003 to 2008 whereas starting from 2008 (the aftermath of the Georgian-Russian war) up until 2011, the export indicators took a downturn. Beginning from 2011, the volume of import from Russia surges again and this trend continues to this day (the volume of goods imported from Russia arrived at the highest indicator in 2013). As concerns Georgia’s external trade balance with Russia, it has recurrently been expressed with a negative figure over the span of many years and this holds true to this very day as well.

Albeit in 2013 the volume of Georgia’s export to Russia achieved the topmost indicator hitherto registered, 2013 was also the year with the highest volume of imported goods from Russia. As a result, the indicator of the negative external trade balance reached one of the highest marks in 2013 (USD -399 million) over the span of the past years (the negative trade balance showed the highest indicator in 2007 totalling USD -529 million). Accordingly, the largest volume of export recorded in 2013 does not entail the most favourable external trade balance for Georgia.

Table 2.  Georgia’s External Trade image003 Source:  National Statistic Office of Georgia – geostat.ge

Table 2 reveals that in 2005 Russia ranked first among the 93 countries where Georgia was exporting its goods, receiving 18% of the total volume of Georgia’s exports. In 2006 (after the proclamation of the embargo) Russia drops to the third place with 8% and its indicators continue decreasing throughout the following years. As for 2013 (in line with the preliminary data), Russia’s share in the exported goods of Georgia mounts again, reaching the fourth position amidst 111 countries, revealing a notable rise from the eleventh position occupied in 2012. The comparison of indicators from 2005 and 2013 shows that in this specific case the difference between the first and fourth positions is not particularly big given the fact that the number of countries receiving Georgian exported goods is around 100. However, it should be mentioned that Russia’s share in the total volume of goods exported from Georgia equalled 18% in 2005 but fell to 7% in 2013. This variation can be explained by the fact that the market was more diversified in 2013 and Georgia was exporting to a greater number of countries (to an additional 18 states) than in 2005. Taking into account the given circumstances (the number of countries receiving Georgia’s exported commodities, their ranking and share in the total volume of export) it can be deduced that the Prime Minister’s assertion about the less negative impact of the Russian embargo is correct.

As for the volume of Georgia’s imports from Russia, in 2005 Russia was in the lead of the 120 importing countries holding 15% of the total volume of imported products. Starting from 2007 Russia is slightly falling behind but in 2013 strengthens its positions again and moves up from the sixth position to the fourth holding 8% of the Georgian imports amidst 122 importing countries.

Table 3.  Georgia’s Export to EU Countries (USD thousand) image005 Source:  National Statistics Office of Georgia – geostat.ge

The table above reveals that the share of Georgia’s export to EU countries in the total volume of Georgia’s exports was characterised with a tendency of increase from 2003 to 2006. Throughout the period between 2006 and 2012 the indices revealed certain fluctuations but, nevertheless, retained relatively high marks. In 2013, Georgia’s export to the European market surged by 72.2% relative to 2012 (which is the highest indicator recorded over the course of the past years) while the share of Georgia’s export to EU countries in the entire volume of Georgian exports equals 20.9% (returning to the average indicator of the past years). Consequently, even though in 2013 the volume of goods exported to EU countries grew by 72.2% (the figure is even higher than indicated by the Prime Minister – 65%), its share in the total volume of Georgia’s exported products stands at the average indicator of the past years. Therefore, 72.2% growth of export to European countries does not entail the greatest advances in this regard.

Conclusion

The Prime Minister’s statement regarding the tripling of exports is rather vague. The volume of Georgian export to Russia grew 4.2-fold in 2013 as compared to the indicator of 2012, 2.52-fold relative to 2006 and 1.2-fold relative to 2005.

Over the span of the period 2005-2013, the number of countries receiving exported goods increased by 18 and the share of goods exported to Russia fell from 18% down to 7%. Considering the number of countries to which Georgia is exporting, their share in the total volume of export and the ranking, today, Georgia is indeed less dependent upon Russia than was the case in 2006.

As for Georgian export to the European market, in 2013 its volume grew by 72.2% as compared to the previous year. This figure represents the highest indicator recorded over the course of the past years but in 2013 the share of exported goods in the pool of Georgia’s total exports – 20.9% equalled the calculated average indicator of the past years. Therefore, 72.2% growth of export to European countries does not imply the greatest advances in this regard.

Accordingly, we conclude that the Prime Minister’s statement:  “Georgia tripled the volume of its export to Russia. In general, I believe that at this stage it is rather improbable for Russia to proclaim another unprovoked embargo on Georgia. Even if we allow the hypothetical possibility of such an occurrence, the impact today would not be as grave as it was in 2006. At that time, the Georgian market was exceedingly dependent upon Russia but since then, we have diversified the economy and expanded into new markets. Take Europe, for instance, where over the past year our export to the European market has grown by 65%. This is an unprecedented indicator,” is HALF TRUE. Originally published in The Financial, issue N. 16(396)