Loading

Resume: There are multiple methodologies to measure the level of poverty in a country. The Speaker of the Parliament of Georgia, considering the figure in his statement, refers to the amount of people living below the absolute poverty line. This indicator is measured by the National Statistics Office of Georgia. The newest available data is from 2017 and not from 2018. As of 2017, 21.9% of Georgia’s population; that is, 816,000 people, were living below the absolute poverty line. Nearly 186,000 people (5%) live with a USD 1.9 daily consumption[1] level.

Taking into account Irakli Kobakhidze’s figures, there are two alternative period scenarios for poverty eradication: with the existing economic growth rate (last two years average – 4.75%), it will be 2030 whilst it will be 2026 at a 7% growth rate. Given the expected trend in the population number, the GDP per capita[2] (purchasing power parity) will be around 18,000 international dollars in both scenarios.

In European countries with the GDP per capita close to 18,000 international dollars,[3] the amount of people living below the USD 1.9 daily consumption level is mostly within the margins of 0.8% - 1.3%. Romania is an exception where the poverty level is relatively high at 6.2% whilst Turkey is only at 0.4%. The level of poverty, as well as any other indicator in every country, is affected by specific factors. Therefore, it is possible that the correlation between some data in one country might not be similar in another. Given the general picture, it is expected that under the aforementioned scenario, it will not be possible to fully eradicate poverty in Georgia in the timeframe indicated in the statement but the situation will be substantially improved.

Despite the aforementioned, considering the specific nature of the statement, as it contains several assumptions with references to future estimates, FactCheck leaves Irakli Kobakhidze’s statement without a verdict.

Analysis

The Speaker of the Parliament of Georgia, Irakli Kobakhidze, stated that in accordance with the previous year’s data, there are 800,000 people in Georgia living below the poverty line. As clarified by Mr Kobakhidze, it will take ten-to-12 years with the current economic growth rate to fully eradicate poverty whilst with a 7% economic growth rate, a period of seven-to-eight years will be needed. There are multiple methodologies to measure the level of poverty in a country. The Speaker of the Parliament of Georgia, considering the figure in his statement, refers to the amount of people living below the absolute poverty line. This figure is measured by the National Statistics Office of Georgia whilst the methodology is based on the World Bank’s Basic Needs Method. The Basic Needs Method measures poverty based on the research of incomes and expenses of domestic households. The poverty line is measured by the value of the minimum caloric intake recommended for a working-age male. The latest available figure is from 2017. As of 2017, 21.9% of Georgia’s population; that is, 816,000 people, were living below the absolute poverty line.

Graph 1: Trend of Changes in Population Living Below the Poverty Line

Source: National Statistics Office of Georgia, World Bank

Poverty measuring figures/indicators might be affected by both the social policy of the country (sustenance, aid and other social transfers) and the economic growth rate. However, the only way for a natural reduction of poverty is economic development. Therefore, the approach to tie the reduction of the number of citizens below the absolute poverty line to economic growth is correct although the full eradication of poverty (bringing the number of people below the poverty line to zero) is a utopian goal.

Taking into account the aforementioned figures, there are two alternative scenarios for the period for poverty eradication: with the existing economic growth rate (last two years average), it will be 2030 whilst it will be 2026 with a 7% growth. Table 1 illustrates the estimated economic figures for both scenarios.

Table 1: GDP Change Under Different Scenarios (2011 International Dollars)

2018

2020

2025

2026

2027

2028

2029

2030

Growth Scenario - 4.75%

GDP PPP (Billion)

37.89

41.57

52.43

54.92

57.53

60.26

63.13

66.12

GDP PPP (Per Capita)

10,159

11,200

14,176

14,850

15,555

16,294

17,068

17,956

Growth Scenario - 7%

GDP PPP(Billion)

38.70

44.31

62.15

66.50

71.15

76.13

81.46

87.17

GDP PPP (Per Capita)

10,377

11,938

16,804

17,980

19,238

20,585

22,026

23,670

Source: World Bank, UN, Author’s calculations

The 2017 GDP (in international dollars), calculated in purchasing power parity, is 36.2 billion international dollars in Georgia. Under the 4.5% growth scenario, that figure will reach 66.12 billion by 2030 whilst it will reach 66.5 billion international dollars under a 7% growth.

Taking into account the expected trend of population changes and with aforementioned figures, in both cases the real GDP PPP per capita will be 17,956 – 17,980 international dollars. Table 2 illustrates poverty figures for those European countries which used to have a GDP per capita within the same margin in the nearest past. The amount of people living below the USD 1.9 daily consumption is taken as the poverty measurement to ensure the comparability of the data for different countries.

Table 2: Poverty Figures for Comparable Countries for 2010-2016

Country

Value

2010

2011

2012

2013

2014

2015

2016

Average

Bulgaria

Threshold 1.90$

2.0%

2.2%

2.0%

1.7%

1.5%

-

-

1.9%

GDP PPP (2011)

15,283

15,676

15,772

15,939

16,324

16,999

17,793

16,255

Croatia

Threshold 1.90$

1.2%

0.7%

0.7%

0.7%

1.0%

0.7%

-

0.8%

GDP PPP (2011)

20,183

20,758

20,343

20,299

20,364

21,026

21,922

20,699

Estonia

Threshold 1.90$

0.7%

1.0%

0.7%

1.0%

0.7%

0.5%

-

0.8%

GDP PPP (2011)

22,741

24,543

25,692

26,283

27,114

27,550

28,110

26,005

Greece

Threshold 1.90$

1.0%

1.2%

1.5%

1.0%

1.5%

1.5%

-

1.3%

GDP PPP (2011)

28,726

26,141

24,364

23,746

24,082

24,170

24,212

25,063

Hungary

Threshold 1.90$

0.0%

0.0%

20.0%

20.0%

70.0%

50.0%

-

26.7%

GDP PPP (2011)

22,404

22,841

22,582

23,119

24,161

25,034

25,664

23,687

Latvia

Threshold 1.90$

1.7%

1.0%

1.0%

1.2%

0.7%

0.7%

-

1.1%

GDP PPP (2011)

18,252

19,773

20,828

21,564

22,172

23,019

23,743

21,336

Lithuania

Threshold 1.90$

1.5%

0.7%

1.0%

0.7%

1.2%

0.7%

-

1.0%

GDP PPP (2011)

21,071

22,854

24,049

25,144

26,258

27,046

28,034

24,922

Romania

Threshold 1.90$

4.5%

5.7%

6.7%

7.2%

7.5%

5.7%

-

6.2%

GDP PPP (2011)

17,469

17,908

18,361

19,077

19,802

20,666

21,782

19,295

Turkey

Threshold 1.90$

0.8%

0.3%

0.3%

0.3%

0.3%

0.3%

0.2%

0.4%

GDP PPP (2011)

17,959

19,661

20,282

21,651

22,402

23,388

23,756

21,300

Source: World Bank

As illustrated by the table, in the European countries which had a GDP per capita close to 18,000 international dollars, the number of people living below the USD 1.9 daily consumption line is mostly within the range of 0.8% - 1.3%.[4] Romania is an exception where the poverty level is relatively high and constitutes 6.2% whilst Turkey is only 0.4%. The level of poverty, as well as any other indicator in every country, is affected by specific factors. Therefore, it is possible that the correlation between some data in one country might not be similar in another. Given the general picture, it is expected that under the aforementioned scenario, it will not be possible to fully eradicate poverty in Georgia in the timeframe indicated in the statement although the situation will be substantially improved.



[1] An alternative poverty measuring method used by the World Bank. Calculations are made in 2011 international dollars.

[2] GDP PPP in 2011 international dollars. The methodology of GDP PPP calculation takes into account differences in currency purchasing power between the countries.

[3] Within the margins of 18,000 – 26,000 international dollars.

[4]In the case of Bulgaria, with a relatively low GDP per capita, it is 1.9%.


Persons

Similar News

2748 - Verified Facts
FactCheck Newspaper
24%
True
23%
Mostly True
13%
Half True
10%
Mostly False
8%

Most read