Levan Davitashvili: “Georgia’s nominal GDP per capita in PPP terms constituted 34% of the EU average in 2019; today, it has risen to 44%.”

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

Georgia’s nominal GDP per capita, measured by purchasing power parity (PPP), totalled USD 16,800 in 2019 whilst the EU average was USD 48,800. Preliminary data shows that Georgia’s figure rose to USD 27,400 by 2024 with the EU average reaching USD 62,700. Thus, Georgia’s GDP per capita marked an increase from 34.4% to 43.7% of the EU level over the five-year period.

Whilst data for 2024 at constant prices is not yet available, earlier trends suggest a similar trajectory. Georgia’s GDP per capita at constant 2021 prices rose from 35.3% to 42% of the EU average between 2019 and 2023.

Notably, although this did not influence the verdict, Georgia’s economy has grown at a faster rate than that of the European Union since 1995 with only a few exceptions. This trend did not begin in 2019. Georgia’s GDP per capita constituted 10.7% of the EU average in 1995, 16.6% by 2003 and 28.8% by 2012. Whilst the Eastern enlargement of the EU marked an effect on these figures, it was not a decisive one – with GDP per capita in post-socialist countries remaining below the EU average, many have surpassed older member states.

Considering the factual accuracy, FactCheck concludes that Levan Davitashvili’s statement is TRUE.

Analysis

When discussing economic growth during his appearance on Rustavi 2 show Ghamis Kurieri (Night Courier), Levan Davitashvili stated: “The GDP per capita in 2019, before the pandemic, in PPP terms – which reflects the real value of wealth created, expressed in internationally comparable prices – constituted around 34% of the EU average. This had increased to 44% by last year.”

Consumer prices vary from country to country which is why the GDP per capita is often compared using the purchasing power parity method. This approach calculates the GDP in international dollars – also known as Geary-Khamis dollar – a hypothetical currency used for comparing economic metrics across countries. The international dollar is set equivalent to USD.

Georgia’s nominal GDP per capita (in PPP terms) totalled USD 16,800 in 2019, as compared to USD 48,900 in the EU, according to the International Monetary Fund. Georgia’s GDP per capita is expected to have reached USD 27,400 by 2024, whilst the EU average rose to USD 62,700, based on preliminary estimates. Thus, Georgia’s GDP per capita has grown from 34% to 44% of the EU average over the aforementioned period.

Graph 1: GDP Per Capita in PPP

Source: International Monetary Fund

The most recent data in constant prices is available for 2023. Whilst the ratio differs slightly, the overall trend has remained consistent – specifically, Georgia’s GDP per capita by PPP in 2021 constant prices was 35.3% of the EU average in 2019, rising to 42% in 2023.

The narrowing gap is primarily due to the difference in economic growth rates. Whilst Georgia’s economy contracted by a higher factor than the EU average in 2020, its growth outpaced that of the EU over the following four years.

However, despite the accelerated growth, Georgia’s GDP per capita remains below that of Bulgaria, as of 2024 – the poorest country in the European Union.

In general, poorer countries have a greater potential to grow. Georgia’s economy grew at a faster annual rate than the European Union during the periods 1995-2003, 2004-2012 and 2013-2024, with only a few exceptions. The EU economy expanded by 64% between 1005 and 2024 whilst Georgia’s grew by 438%. Georgia’s annual growth rate overtook that of the EU in 25 of these 29 years.

Georgia’s GDP per capita constituted only one-tenth of the EU average in 1995 but rose to 17% by 2003 and to 29% by 2012. Consequently, if an average EU resident was 9.3 times richer than a Georgian citizen in 1995, that ratio had dropped to 5.6 by 2003 and to 3.5 by 2012.

Graph 2: GDP Per Capita in 2021 Constant Prices (PPP)

Source: World Bank

The Eastern enlargement of the European Union also had an effect on Georgia’s GDP per capita ratio to the EU average as several lower-income post-socialist countries joined the Union. However, this impact was not significant in the long run. Today, the GDP per capita in the Czech Republic exceeds that of Spain and Poland has surpassed Portugal. Furthermore, all three Baltic states, as well as Romania, Croatia and Bulgaria, now have a higher GDP per capita than Greece. The United Kingdom has also left the EU since 2020; however, this did not significantly affect the ratio of Georgia’s GDP per capita to the EU’s as the UK’s GDP per capita (USD 62,600) was nearly identical to the EU average.

In conclusion, Georgia still lags behind the European Union in terms of GDP per capita based on PPP both in current and constant prices. However, the gap has been narrowing over the years with the ratio experiencing a rise of nearly ten percentage points in the past five years. Considering the factual accuracy, FactCheck concludes that Levan Davitashvili’s statement is TRUE.