Business Confidence Index: business expectation running ahead of reality
16 May 2017

The Georgian Business Confidence Index (BCI)* has improved quite substantially, reaching 29.0 index points, which is an 11.5 index points improvement over the last quarter. The second-quarter increase in the BCI was mostly driven by strong performance in the last quarter and quite a significant improvement in expectations.

After a significant drop of 20.8 index points in Q1, the Past Performance Index, which reflects businesses' assessment of their own economic performance in the previous quarter, posted a notable increase (up 12.3 points). Compared to other sectors, agribusinesses assessed their past performance most positively.

The most striking result in this survey is the surge in business optimism: the Expectations Index nearly doubled, reaching 63.0 index points, which is the highest value in Georgia’s BCI history! In other words, the majority of business respondents expect their performance to improve in the next quarter. Most likely such optimistic expectation is driven by positive macroeconomic developments in Georgia (stability, and even strengthening of the GEL) and in Georgia’s main trade and tourism partner countries. The highest increase in expectations was recorded in the manufacturing sector.

The Sales Price Expectation Index decreased substantially. Businesses in the agricultural sector predict the highest price drop in the next quarter, as is quite normal at this time of the year.

Large businesses demonstrated a more positive outlook compared to Small and Medium Enterprises. 

Irrespective of their size, businesses name lack of demand and finances as the main factors that limit their activities.