BAKU, Azerbaijan, Sept. 30
By Tamilla Mammadova - Trend:
For the fourth quarter of 2020, Georgian BCI decreased by 18.7 index points and reached -28.6 after a significant improvement in the previous quarter, Trend reports referring to ISET-PI, a think-tank based at the International School of Economics of Tbilisi State University.
As reported, business confidence deteriorated across all sectors, except retail trade and financial. The largest decrease is observed in the construction sector. The negative change in BCI, for 4Q2020, is driven by significantly pessimistic future expectations.
The Index also looks at three main sub-indexes.
According to ISET-PI, the Past Performance Index, which considers the business sector's assessment of their own economic performance in the previous quarter, did not change much, increased slightly by 0.2 points compared to 3Q2020, and will reach -40.4 in 4Q2020.
"The construction sector has the greatest decline in past performance," ISET-PI said.
Expectations Index, which reflects business optimism, deteriorated significantly after the recovery in 3Q2020, reaching new historic low, -41.7 points. According to ISET-PI, for 4Q2020 all sectors, except retail trade have demonstrated decreased expectations.
As for the Sales Price Expectations Index, it increased and reached 2.7 points, indicating a higher share of businesses that anticipate increasing prices on their products. "Service and agriculture are the only sectors where a higher share of businesses predict decreasing prices in the future," the ISET-PI found.
For 4Q2020 access to finances and lack of demand will become more important limiting factors for both types of firms – ISET-PI concluded - especially for large companies, which, together with an increased share of "other" factors, could reflect the post-COVID-19 situation that business sector is currently facing.
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