For four consecutive months since February 2015, the Georgian Consumer Confidence Index remains stagnant some 22-25 points below its level in 2014. In May 2015, the CCI stood at -35.1 points, exactly equal to its value a month ago.
The lack of improvement in the overall CCI is the result of its two main subcomponents – the present situation index and the expectations index – moving in opposite directions and cancelling out each other as far as the overall index is concerned. The present situation index lost another 3.2 points in May 2015 (reaching -48.1 points), while the expectations index added 3.2 points (reaching -22.1 points). Over the last 4 months, the present situation index lost almost 20 points, whereas the expectations index added 6.5 points. As a result, the gap between the two indices currently stands at 26 points, the highest since the CCI’s launch exactly three years ago.
The main driver of improvement in the expectation index is greater optimism with respect to inflation. With the pace of Lari devaluation against the US dollar slowing down in recent months, inflationary expectations are abating, suggesting that the worst may be already behind us. In May, 53.8% of respondents thought that prices would increase in the next 12 months, as compared to 64.4% in April.
The current situation index was most negatively affected by a deterioration in people’s assessment of their personal financial situation (in May, 52.2% of respondents reported a worsening in their household’s financial status during the past 12 months, as compared with 43.5% a month earlier) and the general financial situation in the country (65.7% in May compared to 59.2% in April).
TBILISI AND REST-OF-GEORGIA, YOUNG AND OLD
There are significant differences in consumer confidence (both in level and direction of change) in Tbilisi and rest-of-Georgia. At -32 points, Tbilisi-based consumers report slightly greater confidence than in other parts of the country (-36.8 points). More importantly, while Tbilisi already sees an improvement in consumer confidence (up 5.8 points), rest-of-Georgia is yet to bottom out, suffering another setback of 3.1 points in May 2015.
In particular, less than half (47.4%) of Tbilisi residents reported running into debt as opposed to almost 65% in rest-of-Georgia. The differences in expectations are also quite pronounced. While stagnating in the regions (-0.1 point), expectations improved by as much as 9.5 points in Tbilisi with the largest positive changes in expectations concerning the general economic situation, unemployment and inflation.
Perceptions of the current situation continued to deteriorate outside Tbilisi: 36.7% of regional respondents thought their financial situation worsened over the last 12 months in May as compared to only 23% in April 2015. Likewise, more than two thirds (67.7%) thought that the country’s economic situation had worsened over the last 12 months as compared to 55.6% a month ago.
Younger respondents (aged 35 or younger) are growing a little bit more optimistic on unemployment. While continuing to suffer – only 2.5% reported being able to save money in May as opposed to 9.2% in April – 19.3% of young Georgians thought that unemployment would fall in the future, while only 13.1% thought so in April.