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Levan Davitashvili: “The poverty rate is at a historic low.”

Verdict: FactCheck concludes that Levan Davitashvili’s statement is a MANIPULATION.

Resume: According to the official statistical data, 17.5% of the Georgian population currently lives below the absolute poverty line. The absolute poverty rate stands at its lowest based on data from 2004 to 2021.

The Minister of Economy highlights the absolute poverty rate alone and overlooks the fact that the number of socially vulnerable people is at a historic high. According to the latest figures, over 660,000 people are subsistence assistance recipients which amounts to nearly 18% of the total Georgian population.

In addition, as per the Minister’s claim, the reduction of the absolute poverty rate was precipitated by economic recovery which is not true. In 2021, employment figures in Georgia did not improve and, on the contrary, the unemployment rate increased sharply. Moreover, in light of double-digit inflation in the last year, real average monthly wages have actually decreased. The reduction of the absolute poverty rate in 2021 was precipitated by the growth in the number of subsistence assistance beneficiaries, increased cash assistance for children and other social benefits.

Analysis

The Minister of Economy and Sustainable Development of Georgia, delivering a report before the Parliament of Georgia as part of the Minister’s Hour, stated: “The economy becoming healthier in 2021 contributed to a reduction of poverty. In 2021, the poverty rate dropped from 21.3% to 17.5% whilst it decreased by 2% as well as compared to 2019. We can say that the poverty rate today stands at a historic low. However, we are aware that the poverty rate still persists as an important challenge.”

The Minister is speaking about the absolute poverty rate which shows the portion of the population which lives below the subsistence minimum; that is, in absolute poverty. According to the National Statistics Office of Georgia, the portion of the Georgian population living below the absolute poverty line decreased by 3.8 percentage points in 2021 as compared to 2020 and amounts to 17.5%. The poverty rate decreased by two percentage points in 2021 as compared to the pre-pandemic 2019. The absolute poverty rate in 2021 stands at its lowest based on the statistical data of 2004-2021.

Poverty reduction was largely precipitated by the growth of social transfers instead of revenues from economic activity. This is also indicated by the fact that employment figures did not improve in 2021 and, on the contrary, the unemployment rate increased sharply. In addition, real average monthly wages dropped in Georgia in 2021. Generally, social assistance has a great impact on the reduction of absolute poverty because a person is not considered as statistically poor if he has a subsistence minimum. Poverty reduction in 2021 is attributable to the growth of the number of subsistence minimum recipients, the growth of cash assistance for children and other social benefits. Therefore, the Minister’s claim that economic recovery contributed to the reduction of poverty rate is not true.

Graph 1: Share of Population Below the Absolute Poverty Line (%)

Source: National Statistics Office of Georgia

In addition, whilst speaking on absolute poverty figures, the Minister overlooks the fact that that the number of socially vulnerable people is at a historic high. According to the latest figures, nearly 18% of the total Georgian population is a subsistence assistance recipient which amounts to over 660,000 people.

A natural way to reduce poverty is through rapid economic development and accompanying job growth as well as in increasing the population’s income. Cash assistance has a quicker but a short-lived effect on poverty figures. That part of the population which manages to escape from absolute poverty through the transfers at a given moment will still remain as a vulnerable group.


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