Irakli Kobakhidze: “The European Union is in decline; its share of the global economy has fallen from 30% to 17.5%.”
Verdict: FactCheck concludes that Irakli Kobakhidze’s statement is HALF TRUE.
The EU’s[1] share of the global economy in current prices has fluctuated year to year. It hit a peak of 29% three times – in 1979, 1980 and 1992 – and reached a low of 16.6% in 2022. The figure stands at 17.5% as of 2024.
When calculated in constant prices, the curve takes a downward slope rather than a jagged shape. The EU’s share of the world economy has been in steady decline since the 1970s with the drop accelerating notably from the 1990s onward.
With a few exceptions, the EU economy itself did not shrink during the period reviewed; instead, it has grown by 72% over the past 35 years. The falling share is instead explained by faster growth in other countries, most notably China, whose economy expanded at double-digit rates throughout the 1990s and the 2000s.
Considering that the EU’s share of the global economy has indeed decreased but the decline stems from slower growth rather than a contraction of economic output, FactCheck concludes that Irakli Kobakhidze’s statement is HALF TRUE.
Analysis
Commenting on the European Commission’s report, Irakli Kobakhidze also addressed the of the EU economy, stating: “If the European Union once made up 30% of the global economy, today it has dropped to 17.5%. This share decreases year after year.” … “This tragic situation reflects both economic and political problems the EU faces today – problems created by the European bureaucracy and the loss of sovereignty. We hope this tragic situation will change and the constant decline the European space is experiences in democracy, human rights and the economy will be reversed.” FactCheck verified the economic part of this statement.
Irakli Kobakhidze did not specify the starting date for when the EU’s share of the global economy was measured.
The number of EU member states has changed several times since its founding (the block had generally expanded except for Brexit). However, when the World Bank calculated historical data, it uses the current composition of 27 countries for all periods.
The EU’s share of the global economy in current prices has fluctuated year to year. It accounted for 21% in 1960, 29% by 1980 and today it stands at 17.5%. It hit its peak of 29% three times during the aforementioned period – in 1979, 1980 and 1992 – and fell to a minimum of 16.6% in 2022.
Graph 1: EU’s Share of the Global Economy in Current Prices
Source: World Bank
A different picture emerges when the GDP is calculated in constant (2015) prices. The curve in this case has been steadily declining since the 1970s with the drop becoming more pronounced from the 1990s onward. This does not imply that the EU economy shrank. Its GDP grew from USD 8.8 trillion in 1990 to USD 15.7 trillion in 2024 even in constant prices. The decline in its share is instead due to faster growth in other countries, primarily China.
The EU’s share of the global economy fell from 27.8% to 25.3% between 1960 and 1990 whilst China’s rose from 1.5% to 2.9%. The EU’s share then dropped further from 25.3% in 1990 to 16.2% in 2024 whereas China’s expanded from 2.9% to 19.1%. Given that the sum of shares cannot exceed 100%, a country’s share can decline even as its economy grows if other members grow faster.
Graph 2: EU and China’s Share of the Global Economy in Constant 2015 PricesSource: World Bank
Source: World Bank
China is a major global power and could surpass the United States in GDP by the 2030s or the 2040s if its current growth rate continues.[2] However, it should be noted that when the GDP is measured per capita, whether in current or constant prices, nominal terms, or by purchasing power parity, China still lags significantly behind the EU. In other words, the standard of living in the EU remains higher than in China. China’s per capita GDP in current prices is USD 13,300 which is USD 4,000 less than Bulgaria – the EU’s poorest member. The situation is similar when measured by PPP where China’s per capita GDP is USD 27,000 as compared to Bulgaria’s USD 41,000.
Whilst it is true that the EU’s share of the global economy has indeed declined significantly over the past 35 years, it is important to understand the reasons beyond the numbers. The EU economy grew by 72% between 1990 and 2024 whilst the global economy grew by 168% (in current prices, the EU grew by 200% and the world – 380%).
There are many possible explanations for slower growth but two are key: wealthy countries generally grow at a slower pace and bureaucracy, as well as heavy regulation, hinder growth.
Poorer countries have more room for expansion. Take China as an example: it grew at double-digit rates in the 1990s and the 2000s whilst today that growth has slowed to around 5%. On the other hand, even though the US economy is larger than the EU’s, its growth rate is higher. The US economy grew by 2.8% in 2024 as compared with 1% for the EU. EU growth averaged around 2% annually before the pandemic. The effects of the Russia-Ukraine war have further slowed an already modest growth pace.
Irakli Kobakhidze mentions the “loss of sovereignty” and “constant decline” in his statement. This text can be interpreted as suggesting that the EU lost sovereignty which caused its economy to shrink – a claim that is not accurate. Whilst the question of whether or not European countries have “lost sovereignty” is a separate topic, it is also incorrect to imply that the EU economy itself contracted. The EU economy has grown but at a slower pace as compared with other countries which reduced its share of the global economy.
Considering that the EU’s share of the global economy has indeed decreased but the decline stems from slower growth rather than a contraction of economic output, FactCheck concludes that Irakli Kobakhidze’s statement is HALF TRUE.
