After a decrease in the previous two quarters, BCI has further decreased by 2.2, compared to Q1 2022, and reached 15.1 index points for Q2 2022. Expectations in the Georgian private sector have increased by 7.3 index points, reaching 30.6. The business performance over the past three months decreased significantly, reaching -9.5 points, indicating a downturn in production, turnover, and sales. Compared to the previous quarter, the Sales Price Expectation Index has increased, showing an increase in the market share of businesses that expect higher sales prices over the next three months.
Compared to Q1 2022, BCI decreased in construction (-29.7), and trade (-7.6) while it increased in agriculture (+22.6), manufacturing (+13.3), financial (+13.3), and service (+3.9) sectors.
Business confidence for the 1st quarter of 2022 has increased by 4.3 index points for large companies and decreased by 6.3 for SMEs.
PAST PERFORMANCE
Businesses’ Past Performance Index, which shows the development of businesses’ production, turnover, and sales in the past 3 months, decreased significantly compared to Q1 of 2022 and reached -9.5 for Q2 2022. The biggest deterioration for Q2 2022 was observed in the construction sector (-87.1), followed by the wholesale and retail trade (-45.4), financial (-11.1), and service (-5.9) sectors. Past Performance Index increased for manufacturing (+37.9) and agriculture (+22.7) sectors.
Business activities in the past 3 months have deteriorated for both, large businesses and SMEs. For large firms, the index decreased by 18.5 points and settled at 3.3. For SMEs, the same indicator decreased by 20.9 and reached -23.5 index points.
EXPECTATIONS
The Expectations Index increased by 7.3 index points for Q2 2022 and settled at 30.6. Prospects for the next three months have improved for all sectors except for the construction (-25.5) and wholesale and retail trade (-2.3) sectors. The highest increase is observed in the manufacturing sector (+80.7), followed by financial (+36.3), agriculture (+21.2), and service (+3.4) sectors
Business expectations have improved for large firms (+17.7) and deteriorated for SMEs (-8.6).
61% of the surveyed businesses do not expect any changes in employment over the next three months, 11% of firms stated that they would hire fewer employees in the future, and 29% think that they would hire more.
44% of the firms surveyed expect the economic condition of their businesses to improve over the next three months. 38% do not predict any changes, and 19% of businesses believe their business conditions will worsen.
Sales Price Expectations
The Sales Price Expectations Index increased to 41.4 points for Q2 2022. The index increased for all sectors, except for the manufacturing (-10.6) sector, with the biggest increase in construction (+35.9), agriculture (+34.8), retail and wholesale trade (+12.6), and service (+6.2) sectors.
Around 50% of all firms surveyed intend to increase their prices over the next three months. 3% of firms expect to decrease prices, and the remaining 47% are not planning to change their prices in the near future.
For Q2 2022, limited access to financing and a lack of demand continue to be the most significant obstacles for SMEs. Meanwhile, limited access to financing, labor force, and other factors is indicated as major constraints by large companies.
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.
