In Optimism We Trust!

Overall, the BCI gained 3.2 points compared to Q4 2017. Expectations in the private sector in Georgia increased by 15.5 percentage points, and reached 48.9 index points (up from 33.4 points in Q4). Business performance over the past three months decreased significantly, reaching nearly 35.1 points (decreasing from 50.7), indicating a decline in production/turnover/sales. Improved expectations could outweigh the decreased performance of the past three months, which led to an insignificant raise in overall BCI.

The BCI index increased in the financial (+11.1), service (+14.0) and others (+4.0) sectors, and worsened in the manufacturing (-28.1) agriculture (-8.3), construction (-8.1) and retail trade (-2.8) sectors.

Past performance

The actual performance of businesses significantly decreased compared to the fourth quarter of 2017. In the Q1 2018 reporting period, sales (production or turnover) of the 240 firms surveyed decreased from 50.7 (Q4 2017) to 35.1 (Q1 2018).

A significant increase in performance was observed only in the financial (+46.6) and others (+52.2) sectors. Significant improvement means that in these sectors, the weighted balance between positive and negative responses decreased compared to the previous quarter. In all other sectors, production/turnover/sales for the past three months worsened, with the highest drop recorded for the construction (-101.3), agriculture (-40.2) and manufacturing (-40.2) sectors.

Compared to the previous quarter, a higher share of surveyed firms (63%) stated that employment remained the same over the past three months. Fewer businesses reported either decreases or increases in employment. Moreover, 48% of firms claimed that their business activities remained unchanged over the past three months, while 30% of participants stated that they had improved their performance (which was a decrease of 15 percentage points over the previous quarter).


The Expectations Index increased by 15.5 index points in the first quarter of 2018. Expectations about the next three months improved almost in all sectors, except manufacturing (-67.2), agriculture (-1.1) and financial ( -11.2). The highest increase was reported in the construction and service sectors (see the table).

The majority (65%) of surveyed businesses do not expect any changes in employment over the next three months. Furthermore, 29% of firms stated that they would employ more employees in the future. 59% of the surveyed firms expected that the economic condition of their businesses would improve over the next three months, and 32% did not expect any changes in the future, while a lower share of businesses expect their business conditions to worsen.

Sales Prices Expectations

The Sale Price Expectation Index decreased from 17.2 points (Q4 2017) to 11.2 points (Q1 2018).

The decrease in the Index is driven by the agriculture, construction and retail trade sectors. The retail trade sector's sales price expectations decreased the most, by -36.6 points. The service sector expects a noticeable increase in prices over the next three months. The overall Sales Price Expectations Index decreased for both large companies and SMEs.

The majority (73%) of all surveyed firms are not going to change the prices they charge over the next three months. Only 4% of firms expect to decrease prices, and 23% expect to increase prices in the future.

Limiting Factors

A low level of consumption activities and lack of access to financing continue to be two of the most significant obstacles for businesses. From a total of 240 firms participating in the survey, 22% of large sized firms and 30% of SMEs noted that lack of access to finance was their main obstacle. Meanwhile, 24% of large firms and 32% of SMEs chose lack of demand as the main limiting factor for further business development.


The ISET Policy Institute, working in partnership with the International Chamber of Commerce in Georgia (ICC), implemented the Business Confidence Survey in December 2013, and publishes the Business Confidence Index (BCI) on a quarterly basis.

Confidence is measured through a simple survey instrument targeted at top business executives. The survey is online. Answers obtained from the surveys are aggregated in the form of “balances.” Balances are constructed as the difference between the percentage of respondents giving positive and negative replies.

The methodology for compiling the indices is based on the Joint Harmonised EU Programme of Business and Consumer Surveys.

12 February 2018 17:56