Natia Turnava: “The positive trend in terms of foreign trade still continues. In the first eight months, the total trade turnover increased by 22.2% as compared to the previous year and by 7.2% as compared to 2019.”
Verdict: FactCheck concludes that Natia Turnava’s statement is TRUE.
Resume:
An analysis of foreign trade requires a complex approach because a myriad indicators need to be analysed in order to show the existing reality more precisely. This includes relative (ratio to the GDP) and absolute figures of export, import and the trade deficit as well as the local export dynamic.
The growth of export is an important goal for many reasons for an import-dependent country like Georgia. One of these reasons is that the growth of export is reflected in GDP growth whilst reducing import dependence positively affects the balance of payments. There is indeed a positive trend in the first eight months of 2021 and figures are better as compared to 2019 which partially excludes the base effect when it comes to an export growth trend. In addition, local export and the local export to the total export ratio have also increased.
On the other hand, the trade deficit has increased by 17.2% as compared to 2020. This means that import growth exceeded export growth which negative affects the balance of payments. However, the sharp drop in the trade deficit in 2020 is somehow stipulated by the one-off effect of import restriction. In regard to relative figures, the first eight months of exports to the GDP ratio is 14.7% in 2021 which indicates growth as compared to similar figures in both 2019 and 2020 given the current GDP annual growth forecast.
Analysis
The Minister of Economy and Sustainable Development of Georgia, Natia Turnava, in her assessment of the foreign trade dynamic, stated: “The positive trend in terms of foreign trade still continues. In the first eight months, the total trade turnover increased by 22.2% as compared to the previous year and by 7.2% as compared to 2019.”
The pandemic-induced crisis and imposed restrictions had their impact on the trade industry. In 2020, the export and import of goods dropped by 12% and 15.4%, respectively, as compared to 2019.
According to the preliminary information of the National Statistics Office of Georgia, Georgia’s foreign trade turnover (excluding non-declared trade) amounted to USD 8,678,300 million in January-August 2021 which is 22.2% more as compared to the same period of the previous year. Of this amount, exports constitute USD 2,605,500 million (25.7% higher) and imports amount to USD 6,072,900 (20.7% higher). The negative trade turnover in January-August 2021 amounts to USD 3,467,400 million and this accounts for 40.0% of the total foreign trade turnover.
In January-August 2021, export and imports increased by 7% and 1.2%, respectively, as compared to the same period of 2019. In addition and again as compared to 2019, the trade deficit; that is, the difference between import and export, also decreased by 2.8%. Normally, this is indicative of a reduction of import-dependency. However, the trade deficit increased by 17.2% as compared to 2020 which means that the growth of import exceeded the growth of export and that indicates additional pressure on the balance of payments. On the other hand, the sharp drop in imports in 2020 is somehow related to the one-off effect of import restriction.
Within this context and together with the absolute figures of export, it is important to analyse relative figures; that is, the export to the gross domestic product ratio. The size of the economy differs in different periods and, therefore, objective criteria to measure success also vary. According to the current forecasts of the annual GDP growth, the first eight months of exports in 2021 to the GDP ratio constitutes 14.7% which indicates growth as compared to similar figures in both 2019 and 2020.
Graph 1: Foreign Trade According to January-August Data, 2015-2021, USD Billion
Source: National Statistics Office of Georgia
Graph 2 shows the monthly trend of 2021 which depicts export as compared to the relevant months of 2020 and 2019. The growth of export is an important goal for many reasons for an import-dependent country like Georgia. One of these reasons is that the growth of export is reflected in GDP growth whilst reducing import dependence positively affects the balance of payments. January 2021 was unsuccessful in terms of export since export decreased as compared to both 2018 and 2019. However, in the following months a positive trend has indeed become visible, including higher growth as compared to 2019 which partially excludes the base effect when it comes to the export growth trend.
Graph 2: Monthly Growth of Export in 2021 as Compared to Relevant Periods of 2019 and 2020
Source: National Statistics Office of Georgia
Of additional importance is to analyse the local export dynamic; that is, without re-export. According to the data of the first eight months of 2021, local export has increased by 28.8% as compared to 2020 and by 27.9% as compared to 2019. In terms of export without the re-export to the total export ratio, export without re-export stands at 72.7% of the total exports which is the highest figure since 2017.
Graph 3: Local Export Dynamic in January-August 2015-2021, USD Million
Source: National Statistics Office of Georgia
