ISET

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.

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)! 

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The Business Confidence Index decreased slightly and registered 24.5 points in Q1 (previous quarter BCI was 24.9). Decrease in the retail sector business confidence is marginally the highest. This is driven by a sizeable drop in Consumer Confidence. Consumer Confidence Index (CCI) fell sharply since November 2014. The sales price expectations turned from negative to positive in the first quarter of 2015. Insufficient demand remains the most limiting factor for doing business in Georgia.

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