Consumer Confidence Index

Details: Created: 30 November 2014

November is typically the month when consumer confidence in Georgia reaches its peak. In previous years, an increase in the CCI was observed in October and November. This is normal due to the economic seasonality of Georgia, as was discussed in the previous month’s report. However, in November 2014 we observe a different pattern: consumer confidence has reached its historic minimum. The primary reason for this is probably the political tension and economic instability that was observed during the last month. Political battles within the government and the parliamentary majority impact consumer perceptions of the current situation and, more noticeably, negatively affect expectations, thus drawing down that index. The overall CCI has decreased to -18.4 points (down by 4.7 points from October). Both the Present Situation and Expectation indices have decreased to -20.7 and -17.1 points respectively (down by 4 and 5.4 points over the month). As November was typically the month that saw the highest CCI of the year, this year’s drop draws an even more dramatic picture in annual terms. The overall CCI has decreased by 17 points, which is the sharpest drop in the history of this study. The biggest fall of the year has been observed for both the Present Situation and Expectations indices.

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Details: Created: 30 September 2014

In September 2014, the Consumer Confidence Index (CCI) reached its lowest level since the inception of the survey in May 2012. Both the Present Situation and Expectations indices reached their historic minimums during the month. On the one hand, the sharp drop can be attributed to the summer drought that negatively impacted agricultural incomes in the regions of Georgia, as was mentioned in the August 2014 CCI report. On the other hand, a substantial decrease in consumer confidence has been observed in both Tbilisi and the rest of Georgia. The overall CCI has decreased to -17.7 points (down by 4.4 points from August). Both the Present Situation and Expectations indices reached their historic minimums of -22.6 and -12.7 points (down by 4.8 and 4.0 points) respectively. In terms of annual comparison, the overall CCI has significantly decreased by 9.8 points compared to September 2013. In Tbilisi the overall CCI has dropped by 7.5 points, while in the rest of Georgia the decrease is even bigger at 10.9 points. Both the Present Situation and Expectations indices have decreased, by 11.3 and 8.3 points respectively, which is a sharp drop compared to the same period of the previous year. An annual comparison of the Expectations index shows a sharp fall following the consecutive increase of the past two months (of 1.3 and 1 point in July and August respectively). A few things to note:

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Details: Created: 31 August 2014

Employment and income in the regions of Georgia strongly depend on agricultural performance during the harvest season, which starts from August and finishes at the end of October. The summer of 2014 was one of the driest in recent years, which has already negatively affected the harvest of one to two year cultures like wheat, sunflower, maize, etc.. Consequently, the impact of the drought was reflected in the Consumer Confidence Index in August. Both its components, the present situation and expectations indices, declined in the regions of Georgia. Moreover, a fall in the Expectations Index was observed for the first time after a four-month consecutive increase. In contrast, Tbilisi shows the opposite pattern with increased consumer confidence for both the present situation and expectations indices. This can be explained by the active business season due to commence in September after the summer vacations. More precisely, the overall CCI has decreased to -13.7 points (down by 1.9 points from July). The Present Situation Index has decreased by 2.4 points, reaching -17.8 points – the lowest point since August 2012. The Expectations Index has also fallen by 1.3 points reaching -8.7. In terms of annual comparison, the overall CCI remained nearly the same (up by 0.04 points). Interestingly, the overall CCI in Tbilisi is 1.1 points lower than in same period of last year, while it has increased by 1 point in the regions. Furthermore, the Present Situation Index has decreased by 3.5 points, which was mainly driven by the decrease of the index in the regions of Georgia. As for the Expectations Index, it increased by 3.6 points compared to August 2013. A few things to note: • In year-on-year terms, a comparison of the Present Situation Index for the regions of Georgia, shows a significant 4.2 points decrease.

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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