Tourism is one of the main sources of income for rural population of Georgia, which benefited a lot thanks to summer weather conditions. Unlike to prolonged rainy season in the same period of last year, tourists enjoy sunshine in July 2014. Accordantly, the Consumer Confidence Index increased for the regions of Georgia (ROG) while it declined for Tbilisi citizens, who mostly spend money on holidays. At the same time CCI and both its components improved for young, while it declined for old population, in addition to good holiday season that might be the effect of planned KaZantip Anaklia event. Overall CCI experienced a slight decrease compared to the previous month. The Expectations Index remained almost unchanged (down by 0.1 points), as opposite changes in the regions and Tbilisi balanced each other. Present Situation Index declined (down by 2.9 points), mostly driven by sharp drop in Tbilisi. Thus, the overall Consumer Confidence Index decreased by 1.5 points and reached -11.4 points. In year-on-year terms, the change in the overall CCI is again negative (down by -1.7 points), meaning that in the same period of last year consumer confidence was a bit higher than it is now. Unlike to overall CCI, annual change in the Expectations Index is slight positive number (0.2 points). The Present Situation Index worsened by 3.5 points. A few things to note: •

The Consumer Confidence Index and both its components improved in both, monthly and annual terms, for young population of Georgia, while it declined for the rest. Compared to previous month, Present Situation and Expectation indices increased by 1.6 and 2.9 points for young, while they declined by 6.3 and 2.4 points for old respectively. In year-on-year terms, the patter is very similar, Present Situation and Expectation indices improved by 2.3 and 1.4 points for young and worsened by 7.8 and 0.7 points for old respectivly. • Compared to previous month, in July 2014 the largest improve was observed in the question #3: “How do you think the general economic situation in the country has changed over the past 12 months?” 16% of respondents answered that economic situation improved, while in June 2014 only 13% thought in the same way. Also, 18% of respondents think that economic situation worsened compared to 25% measure in the previous month. • Responses to the question regarding major purchases worsened significantly, if 51% of respondents thought that it was right time to make major purchases in June, this measure is 44% in July 2014. We see the same pattern regarding savings, in July 36% thinks that it is good time to save, while 43% thought the same in June 2014. • Compared to previous month, in July 2014 the overall CCI decreased for all respondents, irrespective of their education level. However, the Expectations Index changed in opposite directions for people with and without higher education. The Expectations Index for respondents with higher education increased by 0.7 points, while the same index for people without higher education declined by 2 points. The Present Situation Index declined by 3.5 points for both groups. As usual, the overall CCI for respondents without higher education is greater (-7.8) than compared to the rest of the population (-15.6 points). • In year-on-year terms, change in the overall CCI and both it’s components are positive for people without higher education, while those are negative for people with higher education. Compared to the same month of previous year, CCI increased by 2.3 points for people without higher education, while it declined by 5.5% for people with higher education. • CCI decreased irrespective to gender but the decline was sharper for female, down by 2.3 points, compared to decline of 0.6 points for male. The gender difference was caused by the Present Situation Index, while the Expectations changes similarly for both groups (up by 0.2 points). All of these changes made the overall CCI for females a little bit lower as compared to that of males (-11.9 and -10.7 , respectively). Regional Peculiarities In July 2014, overall CCI decreased all over Georgia (by 1.5 points), however this was primarily sustained by Tbilisi where we have sharp decline of 7.2 points. On the contrary, overall CCI in rest of Georgia increased by 1.7 points, that sustained the growing trend of CCI in the regions of Georgia after March 2014. The pattern is similar for the Present Situation Index, that sharply decreased for Tbilisi (by 9.3 points) and slightly increased (by 0.5 points) in the rest of Georgia. Regional peculiarities was much pronounced according to the Expectations Index, which significantly worsened for Tbilisi (down by 5.2 points), while it improved for the regions (up by 2.9 points). Looking separately at the responses to certain questions gives insight to better understand characteristics of consumer confidence in the ROG (Rest of Georgia). Specifically, there is a significant worsening of the responses to the question about major consumer purchase, corresponding indicator is down by 13 points: in June 43% of respondents answered that it is right moment to make major purchases, while in July 36% thought in the same way. Furthermore, responses on saving behavior show decrease by 2.1 points, meaning that more people in the ROG think that it is not good time to save money. The most significant improvement in the ROG was observed in the question about changes in general economic situation and corresponding indicator improved by 10 points: in June 14% of respondents positively assessed developments of general economic situation in Georgia, while in July this number increased to 19%, at the same time less people thing that situation got worse (down from 24% to 14%). Differences between capital and the ROG is also interesting. People in regions of Georgia tend to have better expectations about future, then in the capital. In Tbilisi only 44% of respondents expect improvement in the economic situation, while the number is 61% for ROG. The same pattern is observed for other questions underlining expectations on current economic situation. Opposite is observed on question on making major purchases 58.3% of respondent in Tbilisi think that it is the right time for making major purchases, while 36.3% thinks so in the ROG. Lastly, the CCI has been very volatile in Tbilisi since March 2014. The rest of Georgia has been more stable, improving gradually. It is important to understand the roots of such shocks in Tbilisi (the economic center of Georgia) as these will largely affect the economic development of the country.