Business Confidence Index Increasing

Business Confidence Index Increasing

In the third quarter of the year, Business Confidence Index (BCI) insignificantly increased and reached 28,2 points, which is 1,2 points higher compared to the previous quarter.

The Business Confidence Index is defined by ISET together with BIA and ICC Georgia.

Despite the expectations, increase of Business Confidence Index in the fourth quarter has been preconditioned by significant increase of current situation index.

Compared to other sectors, construction sector made the most positive evaluation of own performance.

Compared to the third quarter, business optimism has dropped by 10,9 points.

Besides, financial and service sector representatives have greatly contributed to the drop of Business Optimism Index.

The selling price expectations index has grown significantly. Agricultural businesses expect the biggest price increase in the next quarter. At the same time, the biggest drop in prices is forecasted in processing industry sector.

By sectors, Business Confidence Index changes in the fourth quarter are as follows:

  • Production – dropped by 1,5 points
  • Construction – increased by 10,1 points
  • Retail sales – dropped by 2,5 points
  • Service – increased by 2,5 points
  • Agriculture – Increased by 19,5 points
  • Financial sector – dropped by 13,9 points

60% of the surveyed enterprises claim that in their company employment rate has not changed during the last three months. Besides, 14% of the surveyed enterprises say that the number of employees has decreased in the third quarter, compared to the second.

40% of the enterprises claim that within the last three months their business performance has increased and 25% state that it has decreased. 36% of the surveyed enterprises state that the situation with business performance in their companies has not changed.

Expectations index has dropped in almost all the sectors as follows:

  • Construction – 14 points
  • Retail sales – 6,4 points
  • Service – 18 points
  • Financial sector – 24 points

Expectations index has increased in agricultural sector by 34 points. Moreover, expectations have increased in production sector, which increase made 13,6 points.

Over the period October-December, expectations of business dropped in big as well as in small and medium enterprises, however, the dropped proved to be wider-scale in case of big businesses, as it made 12,9 points.

Majority of the businesses (63%) is not expecting increase of employment during the next three months. Besides, 7% of the surveyed enterprises believes that the number of employees will decrease, while 31% is expecting an increase.

47% of the enterprises believe in improvement of their economic situation within next three months, 41% is not expecting any changes, while 12% is expecting worsening of the situation.

Due to GEL depreciation, majority of the enterprises are expecting increase of prices in the next months. Namely, answering to the question “What do you think will be change in the prices during the next three months?”, majority of enterprises (62%) answer that no price increase is planned. Only 7% is expecting decrease of prices during the next three months, while 31% believe that prices will increase.

Access to financing and low customer performance are still named as the most significant obstacles for business.

Out of 124 surveyed companies, 30% of big businesses and 22% of small businesses still say that lack of access to financing is main challenge for them. 24% of big businesses and 32% of small businesses state that the biggest challenge for them is lack of demand. 

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