Vakhtang Tsintsadze: “The export growth rate began to accelerate in June, reaching a record high over the nine-month period.”
Verdict: FactCheck concludes that Vakhtang Tsintsadze’s statement is HALF TRUE.
Exports increased by 4.1% from January to September in the current year as compared to the same period the previous year, reaching a record nominal figure of USD 4.8 billion for the nine-month period. Whilst the year began with a decline, the picture changed from June onward.
Domestic exports (exports excluding re-exports) fell by 4.9% as compared to the same period in 2023 and by 27% as compared to 2022, unlike total exports. Re-exports accounted for 57% of total exports, increasing even further in August and September and exceeding 60%.
Given the relatively greater significance of domestic exports in the economy than re-exports, overlooking this aspect could be perceived as an attempt to present a more favourable picture. Thus, FactCheck concludes that Vakhtang Tsintsadze’s statement is HALF TRUE.
Analysis
Vakhtang Tsintsadze, the Deputy Minister of Economy and Sustainable Development, stated: “A high growth in exports has been recorded since June. Overall, exports increased by 4.1% from January to September, marking a record volume of USD 4.8 billion.”
Exports experienced a marginal increase of 4.1% from January to September in the current year as compared to the same period last year, reaching a nominal record of USD 4.8 billion. Whilst January began with a sharp 26% decline, followed by a 15% decrease in April, growth accelerated to 30% in July and August and 17% in September.
June can be regarded as a turning point, with exports rising by 6%. Whilst the decline from January to May constituted 10%, exports increased by 20% from June to September.
Graph 1: Exports (USD million)
Source: National Statistics Office of Georgia
Analysing domestic export data is also important alongside total exports. Domestic exports declined by 4.9% to USD 2 billion over the nine-month period as compared to the same period last year. Whilst a 5% decrease may not seem significant, comparisons to January-September in 2022 mark a 27% fall. Furthermore, the share of domestic exports in total exports has dropped to 43%, marking the lowest level since 2014. Notably, GeoStat did not record data for domestic exports and re-exports separately.
Graph 2: Structure of Exports
Source: National Statistics Office of Georgia
The decrease in the share of domestic exports is even more apparent on a monthly basis. Whilst the average share of re-exports amounted to 55% from January to July, it surpassed the 62% mark in August and exceeded 64% in September. Re-exports accounted for nearly USD 2 of every USD 3 generated from exports.
Whilst domestic exports began to grow in June like total exports, the aforementioned experienced a decline again in September. Domestic exports decreased by 16% from January to May, increased by 16% from June to August and decreased again by 9% in September. Whilst there are occasional increases when comparing the data to 2023 levels, exports have decreased in all nine comparisons when measuring against 2022.
Graph 3: Domestic Exports (USD Million)
Source: National Statistics Office of Georgia
Kyrgyzstan is the leading export partner for Georgia due to the high volume of re-exports with a share of 19% in total exports. Whilst Georgia exports products worth USD 225 million to Kyrgyzstan from 1995 to 2021, this figure quadrupled in the first nine months of 2024, reaching USD 907 million, with USD 838 million attributed to light vehicles and USD 43 million to tobacco products.
Kazakhstan ranks second with USD 635 million and Azerbaijan holds the third place with USD 544 million. Light vehicles are the primary export category for both countries.
Georgia sold light vehicles worth approximately USD 1.8 billion in the first nine months of the current year. The share of cars in total exports has reached 36.8%, marking an absolute record. Ferroalloys ranked second amongst export products with USD 227 million which is 7.8 times lower than the export value of light vehicles.
The export of light vehicles to Russia has nearly dropped to zero in contrast to the situation with Central Asian countries. Only seven cars worth USD 142,000 were sold to Russia over the nine-month period. In comparison, the number of cars re-exported to other countries totalled 78,603.
Russia ranks fourth in total exports with USD 523 million, accounting for 10.9%. Furthermore, it holds the top position in domestic exports with USD 420 million and a 20.6% share.
The decline in domestic exports was primarily due to the decrease in price and demand for copper ores. Whilst exports of copper ores constituted USD 753 million in the first nine months of 2022, this figure decreased to USD 433 million in the same period of 2023 and declined further to USD 55 million in January-September 2024.
Although ferroalloy exports experienced a sharp increase of 62% to USD 227 million as compared to the first three quarters of 2023, this figure reached USD 425 million in the same period in 2022. Furthermore, the export of nitrogen fertilisers also declined from USD 207 million to USD 123 million initially and then further to USD 82 million. Additionally, electricity exports were halved, falling to USD 49 million.
Despite the overall decline, there was an increase in the exports of several local products: wine exports increased by 11% to USD 214 million, alcoholic beverages grew by 25% to USD 85 million, mineral waters rose by 25% to USD 127 million and metal ores increased by 237% to USD 170 million. However, these increases were not properly sufficient as overall domestic exports still declines as compared to the same periods in 2023 and even when compared to the same periods in 2022 and 2021.
Overall, the claim that exports are at a record level in monetary terms is accurate in nominal terms. However, it is also true that domestic exports have declined and this downward trend has persisted throughout 2023 and extended to 2024.
Given the relatively greater significance of domestic exports in the economy than re-exports, overlooking this aspect could be perceived as an attempt to present a more favourable picture. Thus, FactCheck concludes that Vakhtang Tsintsadze’s statement is HALF TRUE.
