Confidence has rebounded in January, but slightly. The improvement has however put a halt to the negative trend observed during the last two months. The index is up by 1.4 index points and the pattern is similar for both sub-indices: the Present Situation Index went up by 0.6 (from -43.7 to -43.1) and the Expectations Index by 2.3 (from -35.7 to -33.4) as can be seen from Chart 1.
What happened? Throughout December and January, the Government of Georgia maintained restrictions on trading activities and public transport to reduce the number of COVID-19 cases. It paid off and the daily cases plummeted from 5,000 to under 1,000. This surely helped the CCI in January in spite of the unavoidable social costs.
Pandemic has almost equally harmed high and lower social class. A gap in confidence always existed between those with higher education and the rest, but it had significantly reduced since early 2018 before almost disappearing with the pandemic (see Chart 2).1 However, that gap has reappeared as the pandemic continued.
Since the pandemic started, a higher number of people report running into debts. This may explain why the gap is resuming. All felt at first that they were equal in front of the pandemic but as COVID-19 settled in the country, the more educated, who typically have more financial means, realized that they were better cushioned. This does not change the fact that those reporting that they could make ends meet accounted for 54.6% in January 2020 against 48.8% in January 2021. During the same time, the number of people taking loans increased from 17.4% to 23.8%.
BAR CHARTS: CONSUMER RESPONSES BY QUESTIONS
1 In January, the share of the survey respondents with higher education accounted for 73% whereas, according to the 2014 General Population Census, only 44% qualifies as highly educated.