Natia Turnava: “In spite of the pandemic and the global economic crisis, foreign [direct] investments from the UK have increased.”
Verdict: FactCheck leaves Natia Turnava’s statement WITHOUT A VERDICT.
Resume:
As compared to the first two quarters of 2019, foreign direct investments in Georgia dropped by 25.6%. The pandemic-induced crisis is to blame to some extent, although foreign direct investments had a sharp decline trend even before the pandemic which poses a significant problem.
As of the first two quarters of 2020, USD 410 million in foreign direct investments were made in Georgia. Of that amount, USD 131.9 million FDI was made from the UK which is a 283% growth as compared to the same period of the previous year and constitutes 32% of the total investments. The FDI dynamic from the UK has maintained an upward trend in the near past both at quarterly and annual levels in absolute and relative figures. The highest amount of FDI from the UK, USD 400 million, was registered in 2015 which constituted 23% of the total annual foreign direct investments in Georgia.
Of note is that as of the first two quarters of 2020, the top four investor countries for Georgia are as follows: the UK (USD 131 million), the Netherlands (USD 67 million), the USA (USD 48 million) and Turkey (USD 44 million).
Although the total amount of investments has been dwindling, one can always pick a certain country from the list of investor countries from where the investment inflow trend is growing at a specific period of time. Therefore, highlighting one particular country or a group of countries with positive trends and overlooking the general trend constitutes a manipulation to some extent (underlining a less significant although factually accurate figure to conceal the deterioration of a more important figure). Of note is that Natia Turnava started to habitually adopt such a manipulative approach (after her meeting with the ambassador of the US to Georgia, the Minister of Economy and Sustainable Development emphasised the increased investments from the US and ignored the decreased amount of total investments). However, given the fact that the Minister made her statement within the context of her meeting with the British ambassador to Georgia, FactCheck again refrains from a negative conclusion and leaves the statement without a verdict.
Analysis
At a meeting with the British ambassador to Georgia, the Minister of Economy and Sustainable Development, Natia Turnava, stated: “In spite of COVID-19 and the global economic crisis, foreign investments from the UK have increased.”
A foreign direct investment (FDI) implies a resident of one country owning a share in a foreign-based enterprise and carrying out different types of economic operations related to that enterprise. An investor is considered to be a direct one if he has at least a 10% ownership stake in a foreign-based enterprise’s shares or the equivalent of such participation.
In accordance with the preliminary data of the National Statistics Office of Georgia, USD 237.8 million in foreign direct investment was made in Georgia in the second quarter of 2020 which is 0.5% (USD 1.2 million) higher as compared to the same quarters of 2019. In regard to the first half of 2020, the total FDI amounted to USD 409.6 million which is 25.6% less as compared to the same period of the previous year. The current investment volume is the lowest among the first half investment figures of the last decade. The pandemic-induced crisis is to blame for the decrease to some extent, although there was a sharply accentuated trend of dwindling FDI and this poses a significant problem.
Graph 1: FDI Quarterly Dynamic (USD Million)
Source: National Statistics Office of Georgia
In the first two quarters of 2020, USD 131.9 million FDI was made from the UK which is a 283% growth as compared to the same period of the previous year and constitutes 32% of the total investments. As illustrated by Graph 1, the FDI dynamic from the UK has maintained an upward trend in the near past both at quarterly and annual levels in absolute and relative figures. Among yearly figures, the highest amount of FDI from the UK, USD 400 million, was registered in 2015 which constituted 23% of the total annual foreign direct investments in Georgia.
Graph 2: FDI Dynamic from the UK – Annual, I Quarter and II Quarter Data (USD Million)
Source: National Statistics Office of Georgia
Of note is that as of the first two quarters of 2020, the UK was the largest investor in Georgia. Statistical data of the top investor countries in the first two quarters of 2019 and 2020 are given in Table 1.
Table 1: Top Investor Countries in the First Two Countries of 2020 (USD Thousand)
Source: National Statistics Office of Georgia
Author - Vakhtang Demuria
Category: Economy
