BAKU, Azerbaijan, Feb. 25
By Tamilla Mammadova – Trend:
At the beginning of the first quarter of 2020, Business Confidence Index (BCI) in Georgia increased by 7.3 index points compared to the same period of 2019, reaching 25.8, Trend reports citing Georgian media.
As reported, business confidence improved across all sectors except for the service industry.
The largest growth was observed in agriculture, followed by the manufacturing industry. In both sectors, the increase in BCI was driven by improved past performance as well as more optimistic future expectations.
The Past Performance Index, which considers the business sector's assessment of their own economic performance in the previous quarter, showed an upward trend, increasing by 2.4 points at the beginning of the first quarter of 2020. Manufacturing and agriculture industries were the lead performers in this regard.
After a sharp drop in third quarter of 2019, the Expectations Index, which reflects business optimism, has almost fully recovered in the last two quarters reaching 42.7 index points. At the beginning of the first quarter of 2020, all sectors, except for the service industry, have demonstrated heightened expectations.
The biggest upswing was observed in the Sales Price Expectations Index, which reached its highest value (18.6) since first quarter of 2017 (24.3). This comes after a decreasing trend observed during the past two quarters.
Analysis of indices by firm size shows that overall Business Confidence, Past Performance, and Expectations indices have increased for both large companies and SMEs.
As for the Sales Price Expectations index, it has improved for large firms but slightly deteriorated for SMEs.
The main factors that limit business activities for firms of all sizes remain the lack of demand and limited access to finance, the report said.
After significant recovery in the previous quarter, the BCI increased further by 7.3 points compared to fourth quarter of 2019 and reached 25.8. Expectations in the Georgian private sector improved by 11.5 index points, rising to 42.7.
Moreover, business performance over the past three months has increased, reaching 29.3 points, indicating an upturn in production, turnover, and sales.
Thus, the rise in both business expectations and past performance has led to an improvement in the overall BCI. Compared to the previous quarter, the sales price expectation index has increased, showing growth in the market share of business owners who expect higher sales prices.
The BCI increased in most economic sectors, namely in the agriculture (27.6), manufacturing (25.5), retail trade (15.2), construction (12.5) and financial (8.7) sectors. The only exception was service, in which the BCI declined by 5.1 index points.
Business confidence at the beginning of the first quarter of 2020 has increased both for SMEs (9.2), and large firms (7.7).
As reported, the Business Confidence Index (BCI) results may be overestimated, as the survey only covers businesses currently operating and not those that have already exited the market and to some extent, more likely to have a negative outlook.
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