Consumer Confidence Index

Details: Created: 01 February 2021

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

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Details: Created: 24 November 2020

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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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Details: Created: 23 November 2020

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The CCI has been picking up slightly in October, suggesting that the trend observed since May could be resuming after dip of last month. It is a bit too early to draw a firm conclusion though, as the CCI remains below the values observed four years ago. With the forthcoming second round of elections however, one should not be surprised that the CCI did not move much and, if the positive trend indeed resumes, it should show in next month’s survey.

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CCI Methodology

The ISET Consumer Confidence Survey follows the standard EU methodology (see Useful Links): we randomly sample 300-350 individuals on a monthly basis and question them about the past, current and future financial situation of their families and the country as a whole.Consumer confidence is the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. How confident people feel about stability of their incomes determines their spending activity and therefore serves as one of the key indicators for the overall shape of the economy. In essence, if consumer confidence is higher, consumers are making more purchases, boosting the economic expansion. On the other hand, if confidence is lower, consumers tend to save more than they spend, prompting the contraction of the economy. A month-to-month diminishing trend in consumer confidence suggests that in the current state of the economy most consumers have a negative outlook on their ability to find and retain good jobs. Read more