The December CCI comes as a welcome gift to Georgian policymakers, truly sending season’s greetings from Georgian consumers. Despite the expectation that the index would stabilize at a new, lower level, consumer confidence has shown the largest monthly increase in the history of the study. Both the present situation and expectations indices increased significantly. Improvement was observed in answers to nearly all questions, especially those evaluating the current and expected timing for major purchases, the expected economic situation, and the change in the financial situation of households.

In December, the Consumer Confidence index stood at -30.4 points (a 9.6 points increase from November). Evaluation of the present situation increased by 8.6 points, reaching the -42.3 points mark. Similarly, the expectations index increased by 10.7 points, reaching -18.3. After a disappointing year of decline and fluctuations, the expectations index is now back at nearly the same level as it was a year ago, in December 2014.

PRESENT SITUATION RESPONSES SHIFT FROM NEGATIVE TO NEUTRAL

When evaluating the present situation, consumers’ answers improved for nearly all questions. The most prominent changes were in the assessment of the financial situation of households, the evaluation of the general economic situation in the country, and the attitudes regarding major purchases and saving. The more remarkable improvements were, in most cases, driven by a switch from a negative to a neutral assessment of the present situation. Although the share of positive responses has not increased much, these patterns can be interpreted as a welcome stabilizing trend in consumer confidence. Here are some insights from the December CCI data:

1. The share of responses assessing their household’s financial situation as having worsened over the past 12 months decreased from 50% to 39% month over month (MoM). At the same time, neutral answers increased from 40% to 50% in November, while the share of positive responses remained largely unchanged at 10%.
2. The share of respondents answering that it was not a good moment to make major purchases decreased from 47% to 33% MoM. This decline was again mirrored by a corresponding increase in neutral answers, from 29% to 43% in December.
3. Interestingly, in December the share of people who thought that it was the right moment to save increased from 21% to 30%. This time, the improvement was primarily driven by the decrease in negative answers. The share of those thinking that it was a very bad moment to save decreased from 64% in November to 54% in December.

EXPECTATIONS BECOME MORE POSITIVE

In December 2015, consumers’ expectations improved for most of the questions. In many cases, the improvement was due to a switch from negative to positive answers. In other cases, we observed a split between positive and neutral responses. The largest improvements in expectations were about the general economic situation in the country and unemployment.

1. The share of respondents expecting the general economic situation in the country to get better increased from 32% to 43% MoM. The share of negative responses decreased, while the share of neutral answers did not change significantly.
2. The share of respondents expecting unemployment to grow decreased from 38% to 28% in December. Responses to this particular question mainly shifted towards a neutral assessment.

The good news is that the Consumer Confidence Index increased significantly for all groups of the population, including those that are typically more pessimistic (people with higher education, females, and those aged over 35). The pattern of answers to the survey questions was similar across all population groups.

The table below summarizes the monthly Consumer Confidence Index changes across the different age, gender and education strata:

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REGIONAL PECULIARITIES

The CCI improved in both Tbilisi and the rest of Georgia (RoG). Consumer confidence increased significantly in Tbilisi (by 11 points) reaching -28 points, the highest level over the last 10 months. Analogously, the index increased in the RoG (by 9 points) reaching -32 points – also the highest level over the last 10 months.

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In Tbilisi, responses to most questions improved significantly. Respondents from the Georgian capital reported improvements in the financial situation of their households, the general economic situation, and in their readiness to make major purchases and to save. People in Tbilisi were also more hopeful for 2016, expecting improvements in the general economic situation of the country and a decrease in unemployment. Here are some of the highlights:

• The share of respondents from Tbilisi saying that financial situation of their household had got a lot worse decreased from 52% to 36% MoM. The switch was mainly from negative towards neutral answers, with 52% saying that the financial situation of their household had stayed the same, compared to 39% a month earlier;
• The share of respondents from Tbilisi saying that the general economic situation of the country had got worse decreased from 68% to 61% MoM. Again the switch was primarily towards neutral answers, with 33% saying that the situation will stay the same as compared to 24% in November;
• The share of respondents saying that it was a bad time to make major purchases decreased from 39% to 21% MoM, with neutral answers defining the change;
• The share of respondents saying that it was a good moment to save increased significantly from 22% to 36% in December. Most of this increase was due to the switch from negative responses a month earlier.
• The share of respondents expecting the unemployment rate to grow decreased from 41% to 23% in December. More people expected the unemployment to remain the same over the next 12 months.
• The share of respondents expecting the general economic situation to get worse decreased significantly from 24% to 12%. At least 4 points of this decline was due to improved expectations.

Similar to Tbilisi, the responses from the rest of Georgia (RoG) improved more or less evenly for most of the survey questions. The most prominent changes were again to the questions related to major purchases, savings, and expectations about the general economic situation in the next 12 months:

• The share of respondents saying that it was a bad time for major purchases decreased from 51% to 41% in December. Similar to the responses from the capital, in the RoG this change was primarily driven by a switch towards neutral answers;
• The share of respondents saying that it was not a good time to save decreased from 65% to 58% MoM;
• People in the rest of Georgia seem to be truly optimistic about the upcoming year. The share of those expecting the general economic situation to get better in 2016 increased by a staggering 15 points, from 31% in November to 56% in December.