The Georgian Business Confidence Index (BCI)* has increased slightly, reaching 28.0 index points, which is a 1.2 index points gain over the previous quarter. Against weakening expectations, the fourth quarter improvement in the BCI was mostly driven by a notable increase in the Past Performance Index.
After a significant increase of 11.2 index points in Q3, the Past Performance Index, which reflects businesses' assessment of their own economic performance in the previous quarter increased (+17.2 points). Compared to other sectors, the Construction sector assessed their past performance most positively.
Business optimism about the overall economy dropped to below the Q3 2017 (-10.9, QoQ) level, but remained higher than Q4 2017 at 33.4 index points. The financial and Service sectors have contributed the most to the drop in business optimism.
The Sales Price Expectation Index increased notably. Businesses in the Agriculture sector predict the highest price jump in the next quarter while the highest price drop is predicted in the Manufacturing sector.
Compared to Large businesses, SMEs demonstrated a slightly lower decrease in expectations, and better past performance, leading to decreasing gap between Large businesses and SMEs in the overall Index.
Irrespective of their size, the main factors that continue to limit business activities are lack of demand and access to finance.