The Georgian Business Confidence Index (BCI) gained 3 points on a [-100/100 scale] thanks to a dramatic strengthening of business expectations: from 16 points in the fourth quarter of 2015 to 38 index points in the first quarter of 2016. During this time Georgia did not experience any major changes in the macroeconomic context, and such a sharp advance in expectations can be best understood as a vote of confidence in Giorgi Kvirikashvili’s leadership by the Georgian business community. Indeed, the first months of Kvirikashvili’s term as Georgia’s PM were marked by a large number of pro-business initiatives. The Georgian government is developing proposals for very significant changes in a corporate taxation, abolition of VAT on imported capital goods, improvements in tax administration and insolvency regulations.
After the early signs of rebounding seen in Q3 2015, the Georgian Business Confidence Index (BCI) has lost 3 points (on [-100/100 scale]) on the weakening of business expectations. Having soared more than 30 points in the previous quarter, Q4 expectations are more in line with the actual business performance in July, August and September, in which about 50% out of the 207 companies surveyed reported lower sales, turnover or production numbers. Having lost 18 index points in one quarter – a sharp decline! – the lowering of business expectations brought about a small and hopefully temporary downturn in the overall Q4 2015 BCI.