Business Confidence Index: self fulfilling expectations in action? – Q2 2016
15 June 2016

The Georgian Business Confidence Index (BCI) continues to improve. Unlike last quarter, the second-quarter increase in the index was mostly driven by a significant improvement in performance rather than in business expectations, which kept rising albeit at a marginal pace.

Overall, the BCI gained 10 points (on a [-100/100 scale]) compared to Q1 2016.

The expectations of the private sector in Georgia improved and reached 46 index points (up from 38 points in Q1). Businesses’ performance over the past 3 months increased significantly and became positive, rising from -0.7 to 19.7, indicating a rise in production/turnover/sales. The performance of the past 3 months alongside improved expectations thus maintained overall the BCI at a stable, optimistic level and trend.

The significant improvement in the BCI was counter-cyclical. In the previous two years, performance in Q2 was the poorest of all four quarters, even reaching a historic minimum level in Q2 2015.