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Resume: Mikheil Saakashvili mentions gross national product, which substantially differs from the gross domestic product, which Nikol Pashinyan was referring to. However, given both context and comparison, we can conclude that the former President of Georgia was speaking about the gross domestic product and used the term incorrectly. Mr Saakashvili’s claim that Armenia’s GDP in current USD was never ahead to Georgia’s GDP is false. In accordance with the World Bank’s data, in 2005-2009, Armenia was ahead of Georgia in terms of GDP in current USD, whilst Armenia also outperformed Georgia in 2004-2009 in terms of real GDP in constant 2010 USD prices.

Of additional mention is that Nikol Pashinyan’s use of USD-denominated indicators for GDP comparison is not appropriate for certain reasons. First of all, the optimal method to compare GDP of different countries is analysing GDP as measured by purchasing power parity (PPP) and that indicator puts Georgia ahead of Armenia in 2019. In number of world countries, including Georgia, USD-denominated GDP in 2013-2019 is largely subject to sharp fluctuation of USD exchange rate instead of economic success or failure (see FactCheck’s article on that topic).

Of importance is that in November 2019, National Statistics Office of Georgia published new figures for the gross domestic product (GDP) based on the new methodology of the System of National Accounts which resulted in a growth of Georgia’s GDP.Armenia made transition to this updated methodology in 2014-2015 and therefore, comparison of GDPs calculated with the new and old methodology gives undue advantage to Armenia. It was the failure to take this fact into account that resulted in spreading the false information by the Armenian Prime Minister.

Analysis

The Prime Minister of Armenia, Nikol Pashinyan, posted on his official Facebook page that Armenia had surpassed Georgia in terms of GDP per capita in current prices. Afterwards, Mikheil Saakashvili has published a live-video and based on Nikol Pashinyan’s statement, declared that “this is the first time when Armenia’s gross national product [GDP] has surpassed Georgia’s national product [GDP]”

Nikol Pashinyan’s use of USD denominated indicators for GDP comparison is not appropriate for certain reasons. First of all, the optimal method to compare GDP of different countries is analysing GDP calculated at purchasing power parity (PPP) and that indicator puts Georgia ahead of Armenia this year. As of 2019 data, Azerbaijan’s GDP per capita in PPP dollars constitutes 18,165 international dollars, Georgia’s GDP per capita constitutes 12,227 international dollars, whilst Armenia’s GDP per capita constitutes 11,083 international dollars. Therefore, according to the International Monetary Fund, based on PPP calculations, Azerbaijan is the richest country in the South Caucasus, followed by Georgia and Armenia.

Graph 1: Georgia’s and Armenia’s GDP Per Capita (PPP) in 2004-2009

Source: International Monetary Fund

In 2005-2008, Armenia was ahead of Georgia in terms GDP at purchasing power parity. In certain countries of the region, USD-denominated GDP in 2013-2019 is largely subject to sharp fluctuation of USD exchange rate instead of economic success or failure (see FactCheck’s article on that topic).

Of importance is that in November 2019, National Statistics Office of Georgia published new figures for the gross domestic product (GDP) based on the new methodology of the System of National Accounts which resulted in a growth of Georgia’s GDP.In the case of Georgia, as a result of methodological changes, 2018 nominal GDP increased by nearly GEL 3.5 billion, from GEL 41.1 billion to 44.6 billion. Armenia made transition to this updated methodology in 2014-2015 and therefore, comparison of GDPs calculated with the new and old methodology gives undue advantage to Armenia. It was the failure to take this fact into account that resulted in spreading the false information by the Armenian Prime Minister.

On the other hand, had Nikol Pashinyan’s statement been indeed true, Mikheil Saakashvili’s statement that Armenia’s GDP in current USD was never higher to that of Georgia’s is still false. Furthermore, as shown in table 1, in 2005-2009 Armenia was ahead of Georgia in 2004-2009 in terms of USD-denominated nominal GDP, whilst in 2004-2009 Armenia was ahead of Georgia in terms of real[1] GDP too.

Table 1: Gross Domestic Product in Current Prices (USD) in 2004-2018

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

USD-Denominated GDP Per Capita in Current Prices

Armenia

1192

1644

2158

3139

4011

2994

3218

3526

3682

3838

3986

3607

3592

3915

4212

Georgia

1305

1643

1996

2635

3325

2823

3233

4022

4422

4624

4739

4014

4062

4357

4717

GDP Per Capita in Constant 2010 Prices

Armenia

2244

2572

2934

3367

3630

3137

3218

3371

3604

3705

3819

3924

3917

4199

4407

Georgia

2203

2429

2673

3025

3108

3021

3233

3501

3752

3899

4069

4184

4303

4509

4721

The former Prime Minister of Armenia, Hrant Bagratyan has commented upon Mikheil Saakashvili’s statement. As stated by Mr Bagratyan, it was precisely under Mikheil Saakashvili’s rule in 2005-2009 when Armenia was ahead of Georgia in terms of GDP per capita. In addition, former Armenian Prime Minister does not subscribe to the notion that in 2019 Armenia surpassed Georgia in terms of GDP per capita.


[1]Real GDP figure excludes the effect of inflation.


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