Following a significant jump in the first quarter, BCI has decreased slightly by 1.7 points for Q2 2021 compared to Q1 2021 and reached 1.7. Expectations in the Georgian private sector have decreased by 13.5 index points, reaching 9.0. As for business performance over the past three months, it has increased, reaching -4.1 points, indicating an upturn in production, turnover, and sales. Compared to the previous quarter, the Sales Price Expectation Index has decreased, showing decline in the market share of business owners who expect higher sales prices.
Compared to Q1 2021, BCI decreased in retail trade (-52.6), agriculture (-26.9), and construction (-16.3) sectors, while it increased in manufacturing (18.1), service (12.1), and financial (3.6) sectors.
Business confidence for the second quarter of 2021 has decreased for large companies (-3.8) and increased moderately for SMEs (0.6).
PAST PERFORMANCE
Businesses’ Past Performance Index, which shows the development of businesses’ production, turnover, and sales in the past 3 months, increased compared to Q1 of 2021 and reached -4.1 for Q2 2021.
Significant improvement in performance was observed in the financial sector (79.2), followed by manufacturing (75.0) and service (34.7) sectors. A decrease in past performance was observed in agriculture (-52.0), retail trade (-38.9), and construction (-6.2) sectors.
EXPECTATIONS
The Expectations Index decreased by 13.5 index points for Q2 2021 and settled at 9.0. Prospects for the next three months have improved for manufacturing (26.9), financial (6.7), and agriculture (6.3) sectors.
The index has decreased for retail trade (-87.5), construction (-18.6), and service (-6.8) sectors.
Business expectations have decreased for large firms (-18.7) and increased slightly for SMEs (5.6).
66% of the surveyed businesses do not expect any changes in employment over the next three months, 16% of firms stated that they would hire fewer employees in the future, and 18% think that they would hire more.
30% of the firms surveyed expect the economic condition of their businesses to improve over the next three months. 52% do not predict any changes, leaving 18% of businesses that believe their business conditions will worsen.
SALES PRICE EXPECTATIONS
The Sales Price Expectations Index decreased from 29.7 points (Q1 2021) to 17.2 points for Q2 2021. The index decreased in every sector, except construction (9.7 points increase) and service (14.1) sectors. The overall Sales Price Expectations Index has increased for SMEs and decreased for large companies.
Around 47% of all firms surveyed do not intend to change their prices over the next three months. 43% of firms expect to increase their prices, and the remaining 9% will consider decreasing their prices in the future.
Limited access to financing and a lack of demand continues to be one of the most significant obstacles for both large companies and SMEs. Access to financing turns out to be a more important problem for SMEs compared to large companies. For Q2 2021 “other” factors became less important for both, large companies and SME’s (the last four-quarter average was 37% and 32%, respectively), which could indicate to relative mitigation of Covid-19 restrictions for businesses.
It should be noted that the present BCI results may be overestimated, as the survey only covers businesses currently operating and not those that have already exited the market. Firms, which exited the market are, to some extent, more likely to demonstrate a negative outlook.
