“Economic growth [for 2013] was equal to 8% in November, 8.4% in December and 6.9%, on average, in the fourth quarter with the growth trend continuing in the current year as well.”
Prime Minister Irakli Gharibashvili talked about the recovery of the economic growth as well as the growth trend on 4 June during his meeting with journalists. He stated: “Economic growth [for 2013] was equal to 8% in November, 8.4% in December and 6.9%, on average, in the fourth quarter with the growth trend continuing in the current year as well. We plan to boost the economic growth to be at least 5%. However, we expect this growth to be at least 6.3% as was estimated by the World Bank.”
FactChecktook interest in the country’s economic growth rate and verified the accuracy of the Prime Minister’s statement.
According to the preliminary data from GeoStat, the economic growth rate in November of 2013 was equal to 7.8% as compared to the corresponding period from the previous year. The GDP growth rate in December was equal to 8.4% as compared to the same month in the previous year. The indicator for economic growth in the fourth quarter of 2013 was equal to 7.1% as compared to the corresponding period in the previous year.
The economic growth indicator was equal to 7.8% in January 2014, 5.4% in February 2014 and 8.3% in March 2014. According to the preliminary data of the current year, the GDP real growth was equal to 7.4%. The economic growth rate in April 2014 fell to 2.7%.
It should be noted that Nodar Khaduri, Minister of Finance of Georgia, stated that the reduced turnover in casinos and the gambling business was one of the reasons for the declining GDP growth rate in April of the current year.
Giorgi Kvirikashvili, Minister of Economy and Sustainable Development, also responded to the drop in the economic growth rate. He stated: “The first quarter is followed by a slight decline in economic activity; however, it should be noted that a relatively high growth rate was revealed in the month of April of the previous year and this resulted in a lower rate due to the comparability principle.”
FactCheckcontacted the Policy and Management Consulting Group (PMCG) regarding the decline revealed in the month of April. This organization provides a different explanation regarding the low economic growth rate in April of 2014. According to a representative from this organisation: “The growth by 2.7% in April was caused by the slowdown of the fiscal effect which was caused by the growth of budgetary expenditures from the state in November, December, January… The economy has been developing its potential since April 2014. The gambling business sector and utility businesses, which were stated as the reasons for the downfall in the economic growth rate, are small sectors which cause neither a significant decrease of the GDP nor any significant growth.”
In terms of forecasts, the World Bank determined Georgia’s GDP growth forecast for 2014 to be 6.3%. In May, the European Bank for Reconstruction and Development (EBRD) reduced its economic growth forecasts. In particular, the GDP growth forecast was reduced from 4.5% to 4%. According to the EBRD’s report of May 2014, the crisis in Ukraine is having a negative impact upon the Eastern Europe and Caucasus regions. As defined in the report, the crisis in Ukraine will lead to a decrease of exports in the abovementioned region owing to the new geopolitical conditions. In addition, investment becomes more risky and the aforementioned crisis has relevant implications for tourism as well.
Conclusion FactCheck
analysed economic growth indicators. The Prime Minister was correct while referring to the growth indicators of GDP; however, the second part of his statement which concerns the maintenance of the GDP growth rate is not accurate. From November 2013 until March 2014, Georgia’s economic growth rate was stable although it experienced a significant decline in the month of April of the current year.
It is also noteworthy that the European Bank for Reconstruction and Development (EBRD) reduced Georgia’s GDP growth rate forecast in May of this year from 4.5% to 4% which indicates a decline of the growth rate.
FactCheck concludes that Irakli Gharibashvili’s statement, “Economic growth [for 2013] was equal to 8% in November, 8.4% in December and 6.9%, on average, in the fourth quarter with the growth trend continuing in the current year as well,” is HALF TRUE.
