Levan Davitashvili: “Exports increased by 60% whilst trade turnover grew by 63% from 2019 to 2023.”

Verdict: FactCheck concludes that Levan Davitashvili’s statement is MOSTLY TRUE.

Exports rose from USD 3.8 billion to USD 6.1 billion, imports from USD 9.5 billion to USD 15.6 billion and trade turnover grew from USD 13.3 billion to USD 21.7 billion between 2019 and 2023.

Whilst exports indeed grew by 60% and trade turnover rose by 63% during the reporting period, the structure of exports should also be considered. Local exports increased by only 19% between 2019 and 2023, whilst re-exports surged by 125%. Furthermore, local export levels in 2023 were lower than those of 2021 and 2022. Although re-exports are also beneficial from an economic standpoint, local exports are more significant.

Notably, inflation contributed to the nominal growth of trade turnover. Given the accurate figures, but also the omission of the importance of local exports and the inflation’s role in the growth of trade turnover, FactCheck concludes that Levan Davitashvili’s statement is MOSTLY TRUE/HALF TRUE.

Analysis

During a joint committee meeting in Parliament, the candidate for Minister of Economy and Sustainable Development (prior to confirmation) stated: “Exports of goods increased by 60% whilst trade turnover grew by 63% from 2019 to 2023.

Exports grew by 60% from USD 3.8 billion to USD 6.1 billion, imports increased by 64% from USD 9.4 billion to USD 15.6 billion and trade turnover rose by 63% from USD 13.3 billion to USD 21.7 billion between 2019 and 2023 according to GeoStat data.

Whilst the aforementioned figures are nominally accurate, another key factor should also be considered – the growth in trade turnover has been primarily driven by re-exports since 2022. Re-exports increased by 125% from 2019 to 2023 – a percentage more than double the growth rate of total exports whilst domestic exports grew by only 19%. Notably, domestic exports of 2023 were lower than the 2021 levels.

Graph 1: Foreign Trade Turnover (USD Million)

Source: National Statistics Office of Georgia

Re-exports are not a negative phenomenon and are economically beneficial. However, local exports carry greater significance as they generate higher employment, contribute more substantially to the state budget and create a higher added value.

Graph 2: Structure of Exports (USD Million)

Source: National Statistics Office of Georgia

Light vehicles lead both in re-exports and total exports. Additionally, they rank first in imports. Light vehicles totalling USD 457 million were exported in 2021; however, this figure exceeded USD 2.1 billion in 2023, reflecting a 365% increase in value and 70% increase in volume. Furthermore, the increase in value constitutes 190% whilst the growth in volume amounts to 0.5% when comparing the aforementioned figures to the 2019 levels. The average export value per vehicle amounted to USD 6,800 in 2019, USD 7,100 in 2021 and USD 19,700 in 2023. The upward trend continued in 2024, bringing the average unit value of light vehicles to USD 22,700 in the first ten months of the current year.

Automobile exports to Central Asia surged drastically. Whilst a total of 4,735 cars worth USD 41 million were exported to Kazakhstan and Kyrgyzstan in 2021, 56,727 vehicles worth USD 1.2 billion were sold in 2023 and 68,619 vehicles worth USD 1.6 billion in January-October 2024.

Graph 3: Light Vehicle Exports

Source: National Statistics Office of Georgia

The decline in local exports is mainly due to a reduced demand for copper ores and ferroalloys. Furthermore, sales of mineral and nitrogen fertilisers have also decreased as compared to 2022.

Graph 4: Local Exports by Largest Commodity Groups

Source: National Statistics Office of Georgia

The aforementioned 64% increase in imports was also significantly driven by the re-exports of passenger cars. Automobile imports rose dramatically from USD 1.1 billion to UDS 3.3 billion in 2019-2023. Additionally, the impact of inflation should also be considered in the overall growth of trade turnover. Oil products imports grew by 54% in value, rising from USD 758 million to USD 1.2 billion from 2019 to 2023. However, the increase constituted 16% in terms of quantity – from 1.2 million tonnes to 1.4 million tonnes.

Overall, trade turnover indeed increased by 63%, whilst exports grew by 60% from 2019 to 2023. However, the growth in re-exports – particularly those of light vehicles – had the greatest influence on the aforementioned trend. Re-exports of passenger cars contributed to the upward tendency not only in exports but also nearly doubled imports which subsequently led to doubling the trade turnover. Whilst local exports also grew during this period, they increased by only 19%. Notably, inflation contributed to the nominal growth of trade turnover. Given the accurate figures, but also the omission of the importance of local exports and the inflation’s role in the growth of trade turnover, FactCheck concludes that Levan Davitashvili’s statement is MOSTLY TRUE/HALF TRUE.