After a decrease in the previous two quarters, BCI improved moderately by 2.6, compared to Q2 2022, and reached 17.7 index points for Q3 2022. Expectations in the Georgian private sector decreased by 5.0 index points, reaching 25.6. As for the business performance over the three months, it increased significantly, reaching 6.7 points, indicating an upturn in production, turnover, and sales. Compared to the previous quarter, the Sales Price Expectation Index decreased, showing a decline in the market share of businesses that expect higher sales prices in the next quarter.
Compared to Q2 2022, in Q3 2022, BCI decreased in the agriculture (-49.9), financial (-8.4) and manufacturing (-5.6) sectors, while it increased in construction (+13.8), service (+11.9), and trade (+6.2) sectors.
Business confidence for the third quarter of 2022 increased by 17.9 index points for large companies and by 5.8 points for SMEs.
PAST PERFORMANCE
The Businesses’ Past Performance Index, which shows the development of businesses’ production, turnover, and sales in Q3, increased significantly compared to Q2 of 2022 and reached 6.7. The biggest improvement for Q3 2022 was observed in the service (+38.7), followed by construction (+30.8) and trade (+16.5) sectors. The Past Performance Index decreased for agriculture (-72.4), followed by the manufacturing (-4.7) and financial (-2.9) sectors.
Business activities in the three months improved for both large businesses and SMEs. For large firms, the index increased by 38.0 points and settled at 41.4. For SMEs, the same indicator increased by 26.5 and reached 3.0 index points.
EXPECTATIONS
The Expectations Index decreased by 5.0 index points for Q3 2022 and settled at 25.6. Prospects for the following three months have deteriorated for all sectors except for the construction (+15.4) and service (+8.5) sectors. The highest decrease is observed in the agriculture (-63.3), followed by manufacturing (-46.2), financial (-3.0), and trade (-0.5) sectors.
Business expectations have improved for large firms (+12.7) and deteriorated moderately for SMEs (-0.8).
64% of the surveyed businesses do not expect any changes in employment over the next three months, 7% of firms stated that they would hire fewer employees in the future, and 29% think that they would hire more.
41% of the firms surveyed expect the economic condition of their businesses to improve over the next three months, 46% do not predict any changes, and 13% of businesses believe their business conditions will worsen.
SALES PRICE EXPECTATIONS
The Sales Price Expectations Index decreased to 29.8 points in Q3 2022. The index decreased for all sectors, except for the trade (+0.03) sector, with the biggest decrease in agriculture (-37.1), manufacturing (-18.5), construction (-15.4), and service (-11.4) sectors. The overall Sales Price Expectations Index decreased for both large companies and SMEs.
Around 35% of all firms surveyed intend to increase their prices over the next three months. 3% of firms expect to decrease prices, and the remaining 63% are not planning to change their prices in the near future.
In Q3 2022, lack of a qualified labor force and limited access to financing were the most significant obstacles for large companies. Meanwhile, lack of demand and limited access to financing were indicated as major constraints by SMEs.
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.
