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On 5 February 2018, the Minister of Economy and Sustainable Development of Georgia, Dimitri Kumsishvili, stated:

“As of the first nine months of 2017, foreign direct investments from the European Union amounted to USD 411 million.”

FactCheck

took interest in the accuracy of the statement.

The National Statistics Office of Georgia publishes quarterly data on foreign direct investments to Georgia. At this moment, the Office has already published foreign direct investment data for the first three quarters of 2017. In accordance with the Office’s calendar,

investment figures for the fourth quarter will be available on 12 March 2018.

Before we move to an analysis of Dimitri Kumsishvili’s statement, it is important to examine the change which the National Statistics Office of Georgia implemented vis-à-vis foreign direct investments following a recommendation from the International Monetary Fund (IMF). This recommendation concerned the congruency of the statistical data of the National Bank and the National Statistics Office. The rule for calculating foreign direct investments to Georgia was revised following the implementation of the IMF’s recommendation which in turn resulted in altering existing foreign direct investment statistics. Specifically, some years saw increases in foreign direct investments whilst other years saw decreases. Consequently, the amount of foreign direct investments in the first three quarters of 2017 ended up being the highest ever as compared to the figures of the same periods of the previous years.

The National Statistics Office of Georgia’s data show the amount of foreign direct investments to Georgia in the first nine months of 2017 was USD 1.35 billion. In terms of the figure for the first three quarters, the top investor country to Georgia is Azerbaijan which is followed by Turkey, the United Kingdom, the Netherlands and the United States.

The amount of foreign direct investments received from the European Union reached USD 442 million which is 6% more as compared to the same figure of the previous year. The record amount of foreign direct investments received from the EU in the first three quarters was registered in 2015 at USD 590 million. Of importance is that the share of investments from the EU constitutes 33% of Georgia’s total foreign direct investments whilst the share of CIS countries is 31%.

Analysing the foreign direct investment to GDP ratio is necessary in order to properly assess the real changes in foreign direct investments. In spite of the foreign direct investments of the first three quarters of 2017 being the highest thus far, its ratio vis-à-vis the GDP is marginally lower as compared to the previous year’s figure and constitutes 12.1%. In regard to foreign direct investments from the EU vis-à-vis the GDP ratio, this figure was 4% in 2017 which is higher as compared to the previous year.

Graph 1:

 Foreign Direct Investment to GDP Ratio (Three Quarters)

image001 Source: National Statistics Office of Georgia

Conclusion

The amount of foreign direct investments made to Georgia in the first nine months of 2017 was USD 1.35 billion which is the highest figure for the same periods of the previous years.

Of the total amount of foreign direct investments received in the first nine months of 2017, 33% was invested from the EU. This amounts to USD 442 million which is 6% more as compared to the previous year’s figure and equals 4% of Georgia’s GDP.

FactCheck concludes that Dimitri Kumsishvili’s statement is TRUE.