ISET

Confidence has rebounded in January, but slightly. The improvement has however put a halt to the negative trend observed during the last two months. The index is up by 1.4 index points and the pattern is similar for both sub-indices: the Present Situation Index went up by 0.6 (from -43.7 to -43.1) and the Expectations Index by 2.3 (from -35.7 to -33.4) as can be seen from Chart 1.

What happened? Throughout December and January, the Government of Georgia maintained restrictions on trading activities and public transport to reduce the number of COVID-19 cases. It paid off and the daily cases plummeted from 5,000 to under 1,000. This surely helped the CCI in January in spite of the unavoidable social costs.

Confidence is retreating after a recovery that lasted about 6 months. Last month, in spite of a slight decline of the CCI, we could hold on to the belief that we had reached a plateau in the recovery from the low numbers observed last April. We were hoping for a stabilization, if not a continuation, of the positive trend observed since then. The December numbers leave us with no illusion. The index dropped by 5.5 index points and the pattern is similar for both sub-indices: the Present Situation Index went down by 5.4 (from -38.3 to -43.7) and the Expectations Index by 5.6 (from -30.1 to -35.7) as can be seen from Chart 1.

What happened? Obviously, the COVID Pandemic has disrupted New Year celebrations in Georgia and that has soured moods. More substantially, however, the daily cases have continued to range from 2,000 to 5,000 and this led to the decision by the Interagency Coordinating Council to maintain the same level of restrictions, contrary to what was initially announced. Public transport did not resume working after December 24th and bazaars remained largely closed (except for agrarian bazaars). Restrictions on trading activities bear an important social cost in Georgia and the continuation of restrictions affects a substantial part of the population: the retail and wholesale trade sector employs more than 15% of total employment.1

The recovery of the Consumer Confidence Index, observed from May to July, has been losing steam in September and the November survey confirms that consumer confidence is struggling to go back to prior pandemic levels.

In November 2020, consumer confidence decreased by 3.4 index points (from -30.8 in October to -34.2 in November) with both sub-indices (the Present Situation Index and the Expectations Index) decreasing as can be seen from Chart 1.

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