Shaken by weak consumer demand – Q1 2015
15 January 2015

In the first quarter of 2015, the Business Confidence Index decreased slightly and registered 24.5 on a scale of 100 points. This is down from the 24.9 recorded in the fourth quarter of the previous year. The positive number indicates that the confidence factor among businesses is about 24.5 index points more positive than negative or neutral (e.g. a confidence index of 100 would have indicated that all firms in the sample reported a positive outlook. An index of zero would indicate that the weighted balance of positive and negative views reported by firms is about equal or, alternatively, that all firms reported no change in the current business situation. For more details, see the methodological notes). The reduction in the confidence index was driven by both expectations for the next 3 months and the current performance of the companies in almost all sectors, especially the retail sector.

Decrease in the retail sector business confidence is marginally the highest. The retail sector is the first link in the production chain and is the first to react to the changes in consumers’ confidence. The consumer confidence Index (CCI) reached a new minimum of -25.8 points in January 2015 and it has been continually declining since November 2015. In turn, CCI decreased because of the current depreciation of GEL, which contributed to higher indebtedness among the population.