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On 18 November 2016, during the first session of the Ninth Parliament of Georgia, United National Movement member, Sergi Kapanadze, stated: "Exports have not increased but decreased to the levels of 2011."

FactCheck

verified the accuracy of Sergi Kapanadze’s statement.

According to the data published by the National Statistics Office of Georgia, exports from Georgia amounted to USD 1.7 billion from January to October 2016 which is 7% less than in the same period of the previous year and 2% less than in 2011. It should be pointed out that the value of exports in 2016 is lower than it was in any year from 2011 to 2015.

Chart 1:

 Value of Exports in the First Nine Months from 2010 to 2016

1 Source: National Statistics Office of Georgia

It is interesting to look at the countries where exports from Georgia have decreased. The value of exports to the Commonwealth of Independent States was USD 571 million from January to October 2016. Of this, USD 112 million worth of goods were exported to Azerbaijan, USD 126 million to Armenia, USD 53 million to Ukraine and USD 31 million to Kazakhstan all of which is less than in the years from 2011 to 2015 (only in the case of Ukraine there is growth as compared to the same period of the previous year).

Exports to the United States of America have also dropped. The value of exports from Georgia to the US in 2016 is almost half as much as in 2011 and about 36% less than in 2015. As for the exports from Georgia to Turkey in 2016, it is USD 28 million less than from January to October 2011. Value of exports to Canada amounted to USD 40 million in 2016 which is USD 18 million less than in 2015 and USD 60 million less than in 2011.

Exports from Georgia to Russia from January to October 2016 increased by USD 27 million as compared to the same period of the previous year and in this case, the value of exports in 2016 is also higher than during any year in the period from 2011 to 2013. Exports to the European Union in 2016 have increased by USD 140 million as compared to 2011. Despite this, however, it should also be noted that exports to the European Union have decreased by an average of 12% as compared to the period from 2013 to 2015. Exports from Georgia to China have increased significantly in 2016 and exceed the average value from 2012 to 2015 (USD 48 million) by 200% whilst as compared to 2011 it has increased by USD 121 million.

Table 1:

 Value of Exports to Georgia’s Main Trade Partners (USD Million)

2010 2011 2012 2013 2014 2015 2016
European Union      249.9      312.6      301.9      456.9      525.6      536.1         452.8
Azerbaijan      205.3      310.1      523.9      582.1      473.8      221.1         112.6
Russia        30.2        31.8        38.2      131.0      234.3      126.4         153.3
Armenia      134.0      185.6      208.3      257.1      248.4      155.7         126.6
Ukraine        83.7      106.6      134.3      139.0      120.3        46.0           53.2
Kazakhstan        32.3      148.9        50.8        82.7        77.0        37.4           31.4
USA      145.2      121.0      188.5      121.5      186.3        88.5           56.2
Turkey      178.2      178.7      120.4      153.4      195.0       161            151
Canada        94.5      100.1        90.0        70.5        38.8        58.7           40.8
China        19.4        24.2        19.5        29.2        70.1        96.6         145.2
Source: National Statistics Office of Georgia

The decrease in exports in 2016 was mainly due to a significant drop in revenues from exported products. The value of exports of automobiles amounted to USD 138 million in 2016. This is lower than in the same period of any previous year studied by FactCheck.

More specifically, it is USD 232 million less than in 2011 and USD 16 million less than in the previous year. The decrease in the exports of automobiles was mainly due to the regulation adopted in Azerbaijan about banning the imports of cars built earlier than 2005. Exports of ferroalloys have also fallen, dropping by USD 36 million as compared to 2011 and USD 86 million as compared to 2011. One of the reasons for the decrease in these exports is the economic crisis in Russia and Ukraine.

Exports of wine in 2016 are USD 11 million more than in 2015 and USD 45 million more than in 2011. These levels only fall short of those observed in 2013 and 2014 with USD 5 million and USD 64 million, respectively. Exports of medications have also increased as compared to any previous years, except 2015.

Chart 2:

 Value of Exports by Main Export Products (USD Million)

2 Source: National Statistics Office of Georgia

Whilst talking about the changes in the volume of exports it is important to look at the data of the real exports (exports calculated in fixed prices). Fixed prices exclude the possibility of the depreciation of the currency or changes in prices influencing the overall value of exports and hence are better suited for reflecting the changes in the volume of exports. The National Statistics Office of Georgia publishes the volume of exports in fixed prices by year. The 2016 data are not yet available.

The Chart below depicts clearly that the exports data of 2012, 2013, 2014 and 2015 exceed those of 2011. For example, the value of exports in 2015 is 34% more than it was in 2011. Hence, it is highly unlikely that the value of exports in fixed prices in 2016 will fall to the levels of 2011.

Chart 3:

 The Exports of Goods in Fixed, 2010 prices (GEL Million)

sergi - Copy  Source: National Statistics Office of Georgia

Conclusion Based upon the data from the National Statistics Office of Georgia, FactCheck

compared the values of exports in the first nine months from 2011 to 2016. The comparison makes it clear that the value of exports in 2016 is 2% less than it was in 2011. It was also revealed that 2016’s exports are USD 131 million less than in 2015, USD 724 million less than in 2014, USD 598 million less than in 2013 and USD 284 million less than in 2012.

One of the reasons for the overall decrease is the drop in the exports of automobiles. In the first nine months of 2016, exports to the country’s major trading partners such as the USA, Turkey, Kazakhstan and Azerbaijan have decreased. Exports to the European Union have been dropping for the past two years. The value of exports to the EU in 2016 is 16% less than in 2014 and 19% less than in 2015.

However, after calculating the export data in fixed prices the overall image changes. Real exports have increased by 34% in 2015 as compared to 2011. It is highly likely that the trend of growth will continue in 2016 as well. This means that it is not the volume of the products exported from Georgia which us decreasing but their overall value and hence nominal exports is decreasing. However, this does not change the fact that exports today brings in lesser amount of foreign currency in the country than it did back in 2011.

FactCheck concludes that Sergi Kapanadze’s statement is MOSTLY TRUE.

Editorial Note: The initial version of this article was published on 5 December 2016. After publishing the article our reader contacted us, indicating a flaw in our study. Specifically, the initial version of the article did not calculate the value of exports from Georgia in fixed prices, which has a trend of growth. Taking all this into account, the article has been corrected, with the FactCheck verdict changing accordingly. Sergi Kapanadze’s statement was hence rated as MOSTLY TRUE instead of TRUE.