Summertime Sadness! Business Confidence Index Q3 2019

Overall, BCI has declined by 18.7 points compared to Q2 2019. Expectations in the private sector in Georgia decreased significantly by 23.7 index points, dropping to 21.7 index points. Business performance over the past three months decreased as well, reaching nearly 0 points (down from 23.0), indicating a downturn in production/turnover/sales. Thus, reductions in both business expectations and past performance have led to a fall in the overall BCI.

BCI decreased in almost all economic sectors, namely in the retail trade (-45.5), financial (-24.4), construction (-21.5), manufacturing (-19.0) and service (-16.6) sectors. The exception was in agriculture, in which the BCI improved by 41.8 index points. Business confidence in the third quarter of 2019 dropped for both large firms (-20.2) and for SMEs (-1.9).

Past performance

Businesses’ actual performance decreased by 23.5 points compared to Q2 of 2019. In Q3 2019, sales (production or turnover) of the 149 firms surveyed decreased from 23.0 (Q2 2019) to -0.5 (Q3 2019).

A significant drop in performance was observed in retail trade (-91.7), construction (-28.3), finance (-23.8) and service (-17.6). A significant decrease means that in these sectors, the weighted balance between positive and negative responses decreased compared to the previous quarter. In the remaining sectors, production/turnover/sales for the past three months improved: agriculture (57.0) and manufacturing (6.7). Business activities improved for SMEs and declined for large businesses.


The Expectations Index decreased by 23.7 index points in Q3 2019. Expectations about the next three months worsened for all business sectors except agriculture (18.7). The greatest reduction was reported in retail trade (-63.0). Business expectations worsened for both large firms and SMEs.

The majority (72%) of surveyed businesses do not expect any changes in employment over the next three months. Furthermore, only 16% of firms stated that they would employ more employees in the future.

38% of the surveyed firms expected that the economic condition of their businesses would improve over the next three months, and 42% did not expect any changes in the future, while a smaller share of businesses expect their business conditions to worsen.

Sales Price Expectations

The Sales Price Expectations Index decreased from 16.9 points (Q2 2019) to 12.9 points (Q3 2019). This fall is mostly driven by a decrease in the manufacturing and service sectors. The overall Sales Price Expectations Index increased for SMEs while the index decreased for large companies.

48% of all surveyed firms are not going to change the prices they charge over the next three months. Only 12% of firms expect to decrease prices, and 34% expect to increase prices in the future.

Lack of demand and limited access to finance continue to be two of the most significant obstacles for SMEs and large companies.

It should be noted that the BCI results presented here may be overestimated, as the survey only covers businesses currently operating and not those that have already exited the market. Firms still in operation are, to some extent, more likely to have a negative outlook.

09 September 2019 16:12