After being steadily optimistic for most of 2014 and in the first quarter of 2015, Georgia’s business confidence dropped by 24.5 points to an all-time low level of 3.6 on a scale of [-100; 100] points. The survey, which included 168 firms, suggests that business confidence declined on all measures, across all sectors, and for all firm sizes. Moreover, it is reflected in business perceptions concerning both current performance and expectations concerning the future — ISET, international School of Economics in Tbilisi writes in its report.
The sharp decline in business confidence appears to be related to the recent depreciation of the Georgian lari and the political wrangling that followed. The drop in business confidence comes after seven months during which Georgian consumer confidence has been steadily declining, affecting consumer demand and sales. While the retail sector was the first one to be affected by the slump in demand, second quarter data suggest that the Georgian financial sector is also starting to feel the heat.
Financial sector confidence dropped by a record 50.8 points (from 50.9 index points in the first quarter of 2015 to merely 0.1 points in the second quarter).
ISET will hold a press conference tomorrow, June 9, regarding this issue; it will be led by Maya Grigolia, Senior Researcher at ISET-PI, who will present the results of the Georgian Business Confidence survey for the 2nd Quarter of 2015.
About the Business Confidence Index (BCI): The BCI survey is a joint venture of the ISET Policy Institute and the International Chamber of CommerceGeorgia (ICC-Georgia). It is implemented on a quarterly basis since December 2013. Business confidence for Georgia is measured for seven key sectors: 1) services, 2) retail trade, 3) agriculture, 4) manufacturing industry, 5) financial service 6) construction and 7) other sectors. For each sector, business confidence is measured through a simple survey instrument targeted at top business executives. More than 150 Georgian businesses regularly take part in the survey. We would like to thank BIA for supporting outreach in the recent survey.