Beka Natsvlishvili: “The economy under the previous government was growing faster because the world economic growth rate was twice as high as compared to what it is today.”

Beka Natsvlishvili: “The economy under the previous government was growing faster because the world economic growth rate was twice as high as compared to what it is today.”

Beka Natsvlishvili: “The economy under the previous government was growing faster because the world economic growth rate was twice as high as compared to what it is today.”

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Irakli Abesadze: “In 2012, Georgia’s economy grew by 6.4%. In 2013, the growth rate dropped to 3.2% and since then has not reached 3%. There was no economic crisis in the world in 2012-2013.”

The FINANCIAL -- On 24 May 2017, on air on TV Pirveli, Georgian Dream member, Beka Natsvlishvili, and European Georgia – Movement for Freedom member, Irakli Abesadze, were debating Article 94 of the Constitution of Georgia. The MPs talked about Georgia’s economic growth data in relation to total global economic figures. As stated by Mr Natsvlishvili, Georgia’s economic growth under the United National Movement until 2007 was caused by the rapid growth of the world economy whilst global economic growth over the past years has been slower and this has also affected Georgia. Mr Abesadze stated that there was no such world crisis that might have caused a slowing down of Georgia’s economic growth and that the Government of Georgia’s mistakes are to blame for the country’s poor economic performance.

FactCheck took interest in the accuracy of the politicians’ statements.

The International Monetary Fund (IMF) publishes figures for the world economy which include Georgia’s economic growth rate numbers. According to the IMF’s data, Georgia’s gross domestic product (GDP) growth rate was mostly higher in 2004-2014 as compared to global economic growth in terms of percentage points. The only exception was 2008 and 2009 when Georgia’s economic growth rate figures were below the world economic growth rate by 0.6 and 3.6 percentage points, respectively. In 2013, Georgia’s economic growth rate was equal to the global rate. In 2015-2016, the tendency changed. The country’s economic growth rate was behind the world’s total economic growth figure in both 2015 and 2016.

In 2004-2007, the world economy grew by 5.4% on average. In 2013-2016, the global economic growth rate was 3.4% which is 1.6 times less. Only using world economic trends to explain Georgia’s economic growth dynamic is not appropriate.

The gross domestic product (GDP) is the total sum of the goods and services produced in a given country over the course of one year. Therefore, apart from the world economic situation which naturally affects every country’s economic growth, achieving a high GDP growth rate is hinged upon complex domestic factors and a correct economic policy. Therefore, it is wrong to assume that Georgia’s high or low economic growth rate is directly determined by the general economic situation in the world.

In 2013-2015, the world economic growth rate was almost similar to what was registered in 2012 (3.5%) although Georgia’s economic growth rate has dropped from 6.4% to 3.6% (the average economic growth of 2013-2015). Of note is that because of the war between Russia and Ukraine as well as the falling oil prices, the economic situation in Georgia’s neighbouring countries has worsened significantly since 2014. This negatively affected Georgia’s economic growth rate in 2015-2016. However, the Government of Georgia is fully responsible for the low economic growth rate in 2013-2014 (for instance, major infrastructural projects were either stopped or postponed, selling land plots to foreigners was banned, the visa regime was temporarily made stricter, regulations became harsher and there were constant discussions on increasing restrictions, etc.).

Irakli Abesadze has given almost completely correct economic growth figures for 2012 and 2013. However, his phrase that Georgia’s GDP growth rate has never exceeded 3% since 2013 is incorrect. In 2014, Georgia’s economy grew by 4.6%.

Conclusion

Despite the fact that the world economic growth rate was 1.6 times higher in 2004-2007 as compared to 2013-2016, Georgia’s economic growth rate exceeded world economic growth figures (by 1.8 times) in 2004-2007. In the period of 2013-2016, Georgia’s economic growth rate was higher as compared to the world economic growth figure only in 2014.

As compared to 2012, the deceleration of Georgia’s economic growth rate in 2013-2014 was caused by domestic politics and not by a falling world economic growth rate (this has not happened). Since 2015, the situation abroad, especially in Georgia’s neighbouring countries, has indeed started to deteriorate which has also negatively affected Georgia’s economy.

FactCheck concludes that Beka Natsvlishvili’s statement is MOSTLY FALSE whilst Irakli Abesadze’s statement is MOSTLY TRUE.