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Natia Turnava: “There is a high economic growth in Georgia in 2021 which is a result of the government’s right and balanced economic policy.”

Verdict: FactCheck concludes that Natia Turnava’s statement is MOSTLY FALSE.

Analysis:

The Minister of Economy and Sustainable Development of Georgia, Natia Turnava, speaking about the economic growth dynamic in 2021, stated: “There is a high economic growth in Georgia in 2021 which is a result of the government’s right and balanced economic policy.”

According to the preliminary estimates of the National Statistics Office of Georgia, the real gross domestic product (GDP) growth in September 2021 was 6.9% as compared to the same period of the previous year whilst the average economic growth rate for the first nine months of 2021 is 11.3%. As compared to the same period of 2020, the fields that registered growth in September 2021 are as follows: financial and insurance activities, transportation and storage, processing industry, electricity, gas, steam and air conditioning supply; hotels and restaurants, arts, leisure and recreation; real estate activities and trade. However, the construction industry experienced a decline.

Recently, the authorities make frequent references to the double-digit economic growth figures. However, the higher economic growth rate is largely stipulated by the base effect since unprecedentedly stringent pandemic-related measures were imposed in March-June 2020 which basically paralysed many economic fields. The higher growth figures are registered vis-à-vis those periods under lockdown and, therefore, this makes the average figure higher as well. In 2020, the real economy contracted by 6.2% which resulted in a higher economic growth figure in light of lifting restrictions in 2021 and the restoration of a slackened total demand. This year’s economic growth effect is often referred to in Georgia’s political or expert community as the “spring effect.” This partially throws into question the part of Natia Turnava’s statement where she links economic growth figures with a right and balanced policy.

In fact, high economic growth is not a result of the government’s right policy but instead it is technical growth caused by inconsistent policy, incongruent with the changes of the pandemic situation. Specifically, the government used unprecedentedly stringent measures when there was no ground for them and basically lifted all restrictions when the pandemic situation deteriorated. As a result, the economy declined “excessively” in the first year whilst the resumed activity after lifting restrictions led to a technically high economic growth rate. According to the updated basic scenario of the Ministry of Finance of Georgia, it is forecasted that Georgia’s economic growth in 2021 will be 10% which means that it will only grow by 3.2% as compared to 2019.

Graph 1: Monthly Dynamic (%) of the Economic Growth Rate (As Compared to the Same Month of the Previous Year) and the Economic Restriction Stringency Index in 2020-2021

Source: National Statistics Office of Georgia, Oxford’s CORONAVIRUS GOVERNMENT RESPONSE TRACKER

The graph clearly illustrates a dynamic that the higher economic growth rate this year happens in those periods which experienced a similarly high economic decline last year. However, the economic growth rate remains average as compared to those periods when restrictions were eased. Therefore, the deviation of the economic growth rate as compared to the pre-pandemic years has a mathematical/technical reason and does not stem from the government’s decisions. Therefore, FactCheck concludes that Natia Turnava’s statement is MOSTLY FALSE.


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