The Georgian Consumer Confidence Index (CCI) continued to recover for the fourth straight month in May 2016, gaining 0.9 points from April 2016. At -28.2 points, the CCI remains well below the peak level of -1.4 points recorded in November 2013, but is markedly stronger compared to the bottom of about -40 points reached in Fall 2015.

The improvement in CCI is entirely related to gains in the Present Situation Index (up 1.8 points to -39.5 points). There was no improvement in the Expectations Index (down 0.1 points to -16.9).

Changes in answers to specific survey questions were quite modest. Two positive changes are worth noting:

• The share of respondents who said that the financial situation of their households had worsened a lot over the last 12 months decreased from 35% to 28% month-on-month (May to April).
• The share of respondents who expected unemployment to increase over the next 12 months decreased from 34% to 26% month-on-month.

Several factors, such as a further appreciation of the national currency against the USD, the early start of the tourism season (18% y/y increase in tourist arrivals since January 2016), the “Check-in Georgia” project (which brought several pop stars to the country), and Independence Day festivities, could have potentially influenced consumer confidence in a positive way. However, the combined effect of all these factors on the CCI remains rather limited, given the political and economic risks associated with the upcoming parliamentary elections.

REGIONAL PECULIARITIES

In May, the overall consumer confidence index increased modestly in Tbilisi, while showing no change in the rest of Georgia (RoG). The overall index increased by 2 points in Tbilisi, reaching -26.7 points. The CCI in the RoG did not change, staying at -29.3 points.

In Tbilisi, assessment of the present situation was the main factor behind improvements in the overall index. From this perspective, the most notable responses related to: (i) the financial situation of households, and (ii) readiness to make major purchases. As for expectations, the main cause of the decline was responses to the question about price changes over the next 12 months.

To summarize the changes in consumer confidence in Tbilisi:

• The share of respondents from Tbilisi saying that the financial situation of their household had got a lot worse decreased from 35% to 26% in May.
• The share of respondents from the capital saying that it was the right moment to make major purchases increased from 29% to 42% MoM.
• The share of respondents from Tbilisi saying that prices would stay about the same over the next 12 months decreased from 44% to 34% month over month.

There were not many substantial changes to answers in the rest of Georgia (RoG). The only modest changes were in the answers to questions about expected changes in the general economic situation and assessments of the time to save.

To summarize the CCI responses from the rest of Georgia:

• The share of respondents expecting the general economic situation to get worse over the next 12 months decreased from 17% to 10% in May.
• The share of respondents saying that it was a very bad moment to save increased from 55% to 60% MoM.

 









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