There was a significant increase in confidence during May 2021. The small rebound observed in April accelerated to 5 percentage points in May (from -38.2 in April to -33.2 in May), while both sub-indices (the Present Situation Index and the Expectations Index) moved in tandem.

The economy is strengthening. The real economy has started to recover and, according to Geostat preliminary data, the GDP growth rate in April exceeded 44 percent YoY; something that can be seen around the country and it is certainly good news. The National Bank of Georgia also announced that remittances rose by 145.4% YoY. The figure corresponds to April (not May), when the COVID situation likely forced Georgians overseas to use official channels for transfers home. Nevertheless, there has been a fair level of solidarity. The question is thus whether official channels will continue to be used once the COVID situation stabilizes.

On the COVID front, the news is also positive. The vaccination process has been moving forward, which has contributed to the increase in the Present Situation Index. In addition to the two Chinese vaccines that are currently available, Georgia should also be receiving an additional 43,200 doses of the AstraZeneca vaccine and 1 mln. doses of Pfizer have been announced for later in the summer. Normal life is also returning: In May the curfew has been shortened (starting at 11PM instead of 9PM) and the opening of land borders has been announced starting 1 June. These changes have undoubtedly contributed to the increase in the Expectations Index in May, 2021.

Will it last? There may be some seasonality at play here. Last year May also showed improvement, though the following months were more volatile. People realized that the COVID crisis was here to stay, while the economic recovery is a real facet of life that will continue as long as the COVID crisis remains unchecked. The CCI will therefore continue to recover, and if COVID resurges, one should expect the CCI to display movements similar to those observed last summer. Georgia cannot control what happens outside its borders, nevertheless it can contribute to its own recovery by pursuing its vigorous on-going vaccination campaign with the hope that the Indian Delta variant does not spread.

Tbilisi vs the Rest of Georgia. The improvement was greater in Tbilisi than in the rest of Georgia, and high enough to restore the usual pattern: the measured CCI levels in Tbilisi passed that of the rest of Georgia, as has largely always been the case, except for in April 2021 (Chart 2). It is moreover worth noting that the Present Situation Index outside Tbilisi remained more or less constant, whereas expectations improved substantially (Chart 3). Confidence takes time to travel to the countryside but a rebound is, at least, expected.

BAR CHARTS: CONSUMER RESPONSES BY QUESTIONS