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World Bank:
Georgia moves from lower-middle to upper-middle income country

6 Jul 2016 - 14:59:00

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Agenda.ge,6 Jul 2016 - 14:59, Tbilisi,Georgia

The World Bank has raised Georgia’s position in a global income ranking to reflect the increase in the average income of Georgian citizens.

The latest World Development Indicators database, published by the World Bank Group, saw Georgia move from the lower-middle income to the upper-middle income grouping in 2015 following an increase in gross national income (GNI) per capita.

The GNI per capita is the dollar value of a country’s final income in a year, divided by its population. It reflects the average income of a country’s citizens.

The World Bank Group said last year Georgia’s GNI per capita was $4,160, which guaranteed Georgia to be recognised in upper-middle income category.

Each year on July 1 the World Bank Group revised the analytical classification of the world's economies based on estimates of GNI per capita for the previous year, where the economies were divided into four income groupings: low, lower-middle, upper-middle, and high.

As of 1 July 2016 world economies were divided the following way: 

  • Low-income economies were those with a GNI per capita of $1,025 or less;
  • Lower middle-income economies were those with a GNI per capita between $1,026 and $4,035;
  • Upper middle-income economies were those with a GNI per capita between $4,036 and $12,475;
  • High-income economies are those with a GNI per capita of $12,476 or more.

As Georgia’s GNI per capita reached $4,160 and was higher than the GNI per capita of lower-middle economies, the country was promoted on the list into the upper-middle category, where the GNI per capita varied from 4,036 and $12,475.

Here are the countries with new income group:

As well as Georgia, other countries with new income group classification were Cambodia (lower middle), Equatorial Guinea (upper middle), Guyana (upper middle), Mongolia (lower middle), Russian Federation(upper middle), Senegal (low), Tonga (lower middle), Tunisia (lower middle) and Venezuela (upper middle).

Georgia’s neighbour Russia fell from the high category to the upper-middle category as its GNI per capita moved from $14,330 in 2014 to $ 11,400 in 2015.

Other countries near Georgia also experienced a drop in GNI per capital, showed the World Bank figures.

Azerbaijan dropped from a GNI per capital of $7,600 in 2014 to $6,560 in 2015, Armenia from $4,020 in 2014 to $3,880 in 2015, and Turkey from $10,630 in 2014 to $9,950 in 2015.

Why does this matter? Is this good or bad news for Georgia?

Last year the Caucasus Research Resource Centre (CRRC) projected Georgia would move into the upper middle category for GNI per capital and warned about its positive and negative impacts.

To start with the bad, aid is sometimes distributed based on a country’s economic status. There are many other important factors at play but nonetheless it is often considered in aid decisions. Hence, Georgia may expect lower levels of aid in the coming years,” said the CRRC Georgia.

Meanwhile the positive impacts of a higher GNI per capital meant foreign capital flow would increase in Georgia, said the CRRC Georgia.

When it comes to the good news for the country, Georgians are doing better than the numbers suggested. This does not change the facts on the ground and widespread poverty experienced in Georgia, but in the long run it can lead to a number of benefits,” said the CRRC Georgia.

For instance, foreign private capital flows may increase as the country may be perceived as a more enticing investment environment, having moved to a higher income category.”

Furthermore, as the average income of Georgian citizens increased, it would make the country a more attractive partner for the European Union (EU), added the CRRC Georgia.

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