BCI, after a significant increase in the prior quarter, has decreased by 5.8 compared to Q3 2020, and reached 30.06 index points for Q4 2030. The Georgian private sector’s expectations have decreased by 12.9 points index, reaching 32.3. The business performance index has nearly halved in the last three months to 28.7, which indicates a decline in production, sales, and turnover. Sales Price Expectation Index increased by a significant amount compared to the previous quarter. This shows a growth in the share of business owners expecting higher sales prices.
BCI decreased in the construction (-21.1), service (-15.3) and agriculture (-8.8) sector compared to Q3 2021.
The business confidence index for the 4th Quarter of 2021 has declined by 6.9 points for large companies, and by 0.2 points for SMEs.
PAST PERFORMANCE
Businesses’ Past Performance Index (which shows the development of production, turnover and sales of businesses in the last 3 months) decreased significantly from Q3 2021 to Q4 2021, reaching 28.7. The Past Performance Index was negative for five consecutive quarters until Q3 of 2021. The agriculture sector (-34.9%) was the most affected by Q4 2021, followed by service (-30.2) and manufacturing (-20.0%) sectors.
Both large and small businesses have seen their business activities decline in the last three months. The index for large firms decreased by 20.4, reaching 35.9. The same indicator fell by 3.5 points for SMEs and settled at -6 index points.
EXPECTATIONS
The Expectations Index for Q4 2021 decreased by 12.9 points and settled at 32.3. The outlook for the next quarter has deteriorated in all sectors, except for retail trade (+14.4) and financial (+27.5). Construction (-57.4) and agriculture (-42.5%) are the two sectors that have seen the most significant decline.
The business expectations of large firms have declined (-16.3), while they have improved (+4.6) for SMEs.
64% of businesses surveyed do not expect to see any changes in employment in the next three-month period. 7% of companies said they would hire less employees in the future and 28% believe they will hire more.
40% of firms surveyed expect that the economic conditions of their businesses will improve in the next three months. 42% of firms do not expect any changes to occur, while 17% believe that their business conditions will worsen.
Expectations about the price of a product
The Sales Price Expectations Index has increased from 18.4 (in Q3 2021) to 44.1 (in Q4 2021). The index increased in all sectors. Retail trade (+56.0) & construction (+32.7) showed the largest changes. Both large and small companies have seen an increase in the overall Sales Price Expectations Index.
Around 42% of the firms surveyed plan to increase their prices in the next three month. 7% of companies expect to lower prices and the remaining 50% will not be changing their prices in the next three months.
In Q4 2021, SMEs will continue to face the most significant obstacles due to a lack in demand and limited access to finance. Large companies also cite a shortage of qualified workers as a major obstacle, along with a lack of demand.
Note that the current BCI results could be overestimated as the survey only includes businesses that are currently operating, and not those who have already left the market. The outlook of firms that have left the market is more negative.
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