According to a nationally representative sample of 320 Georgians, interviewed in early April 2019, the Consumer Confidence Index (CCI) decreased by nearly two index points, from -18.9 in March to -20.8 in April. A similar pattern was observed in one of the sub-indices: the Expectations Index declined by 4.3 index points (from -14.1 to -18.4) compared to March, while the Present Situation Index experienced a slight improvement, by 0.3 index points (from -23.6 to -23.3). Table 1, displayed below, elucidates which particular questions were affected by various expectations and are responsible for the drop in the Expectations Index: in both expected inflation and expected unemployment.

Table 1: Change in Consumer Confidence (Index Points) by Questions: April 2019

Note: Questions marked in blue refer to the present situation and questions in red to expectations.

TBILISI VS REST-OF-GEORGIA

For the month of April, consumer confidence deteriorated in both groups, Tbilisians and those living outside the capital. The overall CCI went down by 2.2 index points in Tbilisi (from -14.8 to -17) and by nearly 0.7 index points throughout the rest of Georgia (from -23.9 to -24.6). A similar pattern can be detected in the Expectations Index for both groups; people living inside and outside the capital are not encouraged by their expectations. The Expectations Index declined by almost the same magnitude in Tbilisi and throughout the rest of Georgia, by 4.3 (from -13.9 to -18.2) and 4.2 (from -14.4 to -18.6 index points), respectively. As in the previous case, the major causes of decline are the projected inflation and expected unemployment. Yet, in the current situation, we see a different pattern, with people in the rest of Georgia being more optimistic than in Tbilisi. Accordingly, the Present Situation Index went down marginally in Tbilisi, by 0.1 index points (from -15.7 to -15.8), while in the rest of Georgia it improved by 2.9 index points in April (from -33.5 to -30.6). The latter change, outside of Tbilisi, is mirrored in the questions concerning the current ability to save, past inflation, and the general economic situation (in the past 12 months).

It is noteworthy that people in Tbilisi are almost always more optimistic than those living outside the capital. While the rest of Georgia does not necessarily refer to rural areas, many studies show that there is a lack of economic and social opportunities outside Tbilisi, and this is particularly evident in rural areas. In rural areas, people suffer from poverty and lack basic amenities like roads, uninterrupted electricity and water supply, the internet, etc. Certain amenities are even limited in urban areas outside of Tbilisi. In small Georgian cities, one often cannot find movie theatres, fitness centers, clubs, or cafés. This lack of amenities, paired with poverty, negatively affects the confidence levels of people outside the capital.

In order to overcome these issues, the state and donor organizations have focused on the rural development of Georgia, which has become a major target of the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD), funded by the European Union (EU) and implemented in cooperation with the Georgian government. The program highlights all Georgian regions and aims to reduce rural poverty and promote sustainable rural development. If this goal is achieved, the gap in the confidence between Tbilisians and the remainder of the population is likely to decrease.

MALE VS. FEMALE

Significantly, as finance professors, Ben Jacobson, John B. Lee, and Wessel Marquering write in their 2008 working paper: “Men are strikingly more optimistic about the future performance of key economic and financial indicators than women.” Nonetheless, as observed in previous years, the gender optimism gap appears to follow a seasonal pattern - shrinking or even switching (in favor of females) around April each year. This phenomenon has been observed in five of the last six years (except April 2015). Yet, the pattern in April this year remains in favor of men. The overall CCI increased by 0.7 index points for men (from -19.4 to -18.7), however, it declined for women by about 4.3 index points (from -18.4 to -22.7), compared to March. The same pattern holds for the present situation; the Present Situation Index improved by 4 index points for men (from -24.8 to -20.8) and worsened for women by 2.8 index points (from -22.6 to -25.4). Yet, when it comes to expectations, both groups are worse off in April. The Expectations Index went down by 2.6 and 5.7 index points respectively for males (from -14 to -16.6) and females (from -14.3 to -19.9), compared to March. Table 2 below establishes the questions regarding expected inflation and expected unemployment that caused a drop in the Expectations Index for both males and females.

Table 2: Change in Consumer Confidence (Index Points): by Male and Female subgroup: April 2019

Note: Questions marked in blue refer to the present situation and questions in red to expectations.

MONTHLY AND YEARLY CHANGES IN THE CCI VARIABLES

BAR CHARTS: CONSUMER RESPONSES BY QUESTIONS