Mamuka Mdinaradze: “The Georgian economy is closing the gap with the European economy as the latter is no longer expanding.”
Verdict: FactCheck concludes that Mamuka Mdinaradze’s statement is HALF TRUE.
The European Union substantially exceeds the Georgian economy in terms of quality of life. Notably, Georgia’s per-capita GDP constitutes 20% of the EU’s in terms of current prices but this percentage increases to 41% when adjusting for purchasing power parity (PPP). Whilst the gap is narrowing due to the Georgian economy growing at a faster rate than the EU’s, the claim regarding the stagnation of the European economy is inaccurate as it is still growing, albeit at a slower rate. The EU economy increased by 19.4% from 2013 to 2023, whereas the Georgian economy expanded by 71%.
Georgia is narrowing the gap as compared to the EU and its several member states. Furthermore, the European economy is growing, albeit at a slower pace. Considering the aforementioned information, FactCheck concludes that Mamuka Mdinaradze’s statement is HALF TRUE.
Analysis
Leader of the Parliamentary majority, Mamuka Mdinaradze claimed: “Whilst it is positive that the Georgian economy is narrowing the gap with basic European economy standards, this is because the EU economy has not expanded for some time. We must communicate this information to our citizens.”
Mamuka Mdinaradze made the aforementioned comment in response to the AIESEC’s research, claiming that the average pension in the European Union is 13 times higher than in Georgia. Therefore, the politician’s claims should be understood in the context of the European Union. Furthermore, comparisons should be made on a per-capita basis rather than the entire economy given that Germany’s population exceeds 80 million whilst Malta’s only reaches 0.5 million.
Georgia is a developing country and its per-capita GDP lags behind all 27 EU member states, including the poorest, Bulgaria. Significant gaps exist both in terms of current prices and purchasing power parity (PPP).
The GDP per capita amounted to USD 8,120 in Georgia as compared to USD 40,800 in the EU in 2023 when calculating at current prices. Furthermore, these figures rise to USD 24,700 in Georgia and USD 60,300[1] in the EU when adjusting for PPP. This data implies that the average GDP per capita in the EU exceeds that of Georgia by 2.44 times when considering purchasing power and is five times higher when considering current prices.
The per-capita GDP in the EU was 2.9 times higher as compared to Georgia when looking at purchasing power and 7.4 times higher at current prices in the pre-pandemic year of 2019.
Graph 1: GDP Per-Capita in Georgia as Compared to the European Union
Source: World Bank
The gap between Georgia and the EU is narrowing, given that the Georgian economy is expanding at a higher rate as compared to the EU (the periodic declines in GDP at current prices until 2022 were influenced by exchange rate fluctuations; when GEL was under depreciation pressures, the economy denoted in USD exhibited a downward trajectory). Generally, developing countries have more pronounced growth prospects. Whilst higher rates of growth as compared to developed countries highlight positive tendencies, such trends are not uncommon.
Mamuka Mdinaradze was likely referring to Bulgaria, the poorest EU member, when commenting on basic European standards. The per-capita GDP in Georgia constituted 61% of Bulgaria’s figure in 2013 which later increased to 65% in 2019 and further to 67% in 2023 in PPP terms.
Whilst the Georgian economy increases at a higher rate as compared to the EU and some of its members, the second part of Mamuka Mdinaradze’s statement is still misleading as the EU economy is still increasing, just at a slower pace.
The EU economy had increased by 4.5% in 2023 as compared to 2019 and by 19.4% as compared to 2013. The Georgian economy had increased by 23.4% and 71%, respectively, in the same period.
Graph 2: Growth Rate of the Economy
Source: World Bank
The data highlights that the Georgian economy has expanded at higher rates as compared to the EU economy both the past four and ten years, resulting in a narrowing gap between the two economies. Furthermore, the EU economy is still increasing, albeit at a slower rate. Thus, FactCheck concludes that Mamuka Mdinaradze’s statement is HALF TRUE.
