Business Confidence Index: Optimism Turns to Realism
In the third quarter of the year, Business Confidence Index decreased and made 27,0, which is 2 points lower compared to the previous quarter.
“Decrease of the indexes in the third quarter was mainly preconditioned by the decrease of expectations index, which, taking into account the rates of the previous quarter, could be explained by coincidence of the Confidence of the private sector with the reality rather than worsening of economic situation”, - explained representatives of ISET. ISET determines the Business Confidence Index together with BIA and ICC Georgia.
The current situation index, reflecting the business situation for the previous three months, increased in the third quarter by 11,2 points. Compared to other sectors, construction sector has evaluated its performance most positively.
Compared to the second quarter, business optimism has dropped by 18,8 points. Small and medium enterprises operating in the field of production and trade have significantly contributed to the decrease of business optimism.
Business confidence index has dropped in all the sectors, apart from retail trading (+6,1) and agriculture (+9.3). Biggest drop of the index has been registered for the construction sector.
Answering to the question: “How have your business activities been developing over the last three months?”, 27% of the surveyed companies claimed that the situation has worsened, for 38% nothing has changed and for 43% - the situation has improved.
In the third quarter, the expectations index has decreased in all the sectors and the biggest drop has been registered in the sector of agriculture – 33%. 51% of the surveyed companies believe that their performance will improve during the next three months, 37% is sure that nothing will change and 11% think that things will worsen. Besides, majority of the companies – 78% - does not expect price changes during the next three months, 6% believe that the prices will decrease and 16% of the companies forecast increase of prices.
Majority of the surveyed businesses name insufficient demand and lack of access to financing as one of the most significant limiting factors for their activities.