On 30 April 2015, in his speech before the Parliament of Georgia, United National Movement member, Zurab Melikishvili, declared that the GDP per capita in Georgia increased in 2014. However, according to this year’s prognosis, this number is expected to decrease by USD 612.
FactChecktook interest in the accuracy of Zurab Melikishvili’s statement.
According to the information of the National Statistics Office of Georgia, the GDP per capita increased by GEL 512 in 2014 as compared to 2013 and reached GEL 6,500. Due to the depreciation of GEL, the same number rose only by USD 81 and reached USD 3,681.
Table 1:
GDP per Capita in Georgia (2010-2014)
| 2010 | 2011 | 2012 | 2013 | 2014 | |
| GDP per capita (current prices) in GEL | 4,675.7 | 5,447.1 | 5,818.1 | 5,987.6 | 6,499.7 |
| GDP per capita (current prices) in USD | 2,623.0 | 3,230.7 | 3,523.4 | 3,599.6 | 3,680.8 |
As we can see, the GDP per capita in Georgia rose both in GEL and USD. FactCheck
used the International Monetary Fund’s prognosis to verify the second part of the MP’s statement with regard to the expected decrease of the GDP by USD 612 in 2015. According to the International Monetary Fund, Georgia’s GDP per capita will indeed decrease in 2015 by USD 612 and equal USD 3,087. According to the International Monetary Fund’s prognosis, Georgia’s GDP per capita will increase by GEL 352. The significant difference between the two indicators, one denominated in GEL and one denominated in USD, is caused by the depreciation of GEL. Revenues for 2014 are calculated with the USD to GEL exchange rate at 1.76 whilst for 2015 the revenues are calculated by the USD to GEL exchange rate set at 2.23.
Besides the depreciation of GEL, we have to consider the fact that the International Monetary Fund has cut Georgia’s expected economic growth (real GDP growth) rate from 5% to 2%. Additionally, it set the expected inflation rate (GDP deflator) at 6.5%.
According to the prognosis of the Ministry of Finance of Georgia, the nominal GDP growth rate will be 9.2% for 2015 (the nominal GDP growth rate is the sum of the real GDP growth rate and the expected inflation rate). Of that, 5.2% is the real GDP growth rate and 4.2% is the level of inflation. According to this prognosis, the GDP per capita will rise by GEL 600 if denominated in GEL and by USD 250 if denominated in USD. However, the Ministry of Finance used the USD to GEL exchange rate of 1.8 to base its calculations although this exchange rate is no longer valid. If we take into account the present USD to GEL exchange rate (2.36), the GDP per capita in USD will be decreased by USD 607, even according to the Ministry of Finance’s prognosis.
Table 2:
Ministry of Finance of Georgia Prognosis
| 2011 | 2012 | 2013 | 2014 (expected) | 2015 (prognosis) | |
| Difference in Percentage (compared to other years if not indicated otherwise) | |||||
| National Income and Prices | |||||
| Nominal GDP | 17.4% | 7.5% | 2.6% | 8.7% | 9.2% |
| Real GDP | 7.2% | 6.2% | 3.3% | 5.0% | 5.0% |
| Nominal GDP | |||||
| GEL million | 24,344 | 26,167,3 | 26,847,4 | 29,176,4 | 31,860,6 |
| USD million | 14,434,7 | 15,846,9 | 16,140,5 | 16,577,5 | 17,700,3 |
| GDP per capita | |||||
| Denominated in GEL | 5,447.1 | 5,818.1 | 5,982.6 | 6,501.6 | 7,099.8 |
| Denominated in USD | 3,230.7 | 3,523.4 | 3,596.6 | 3,694.1 | 3,044.3 |
Currencies of many other countries have depreciated against USD lately. However, if we look at rankings in terms of revenues, Georgia still backslides. In 2014, Georgia held the 113th place with its GDP per capita at USD 3,699 whilst it will go down to the 121st
place in 2015 according to the International Monetary Fund’s prognosis (USD 3,087).
We also analysed how the GDP per capita will change in terms of Purchasing Power Parity (PPP). This methodology measures income in terms of purchasing power. Prices are lower in many developing countries as compared to those of developed countries which means that the developing countries always have a higher purchasing power. Georgia’s nominal GDP per capita was USD 3,681 in 2014 whilst in PPP it equalled USD 7,653. If this methodology is applied, Georgia’s GDP (PPP) per capita will increase to USD 7,900. However, Georgia will cede its present 113th place and move to the 115thposition.
Conclusion
Georgia’s GDP per capita rose by USD 81 in 2014. According to the prognosis of the International Monetary Fund, Georgia’s GDP per capita will decrease by USD 612 in 2015. According to the prognosis of the Ministry of Finance of Georgia, Georgia’s GDP per capita will increase by USD 250 in 2015. However, the USD to GEL exchange rate (1.8) which the Ministry of Finance used to make its calculations is no longer valid.
To analyse the income per capita it is important to take into account the changes of data displayed in terms of PPP. According to this methodology, Georgia’s GDP per capita will increase by USD 247 in 2015.
FactCheck concludes that Zurab Melikishvili’s statement is MOSTLY TRUE.
