The Retail Trade Sector Optimistic for the Holiday Season

Business Confidence Index Q4 2019

After registering a record low value in the previous quarter, the BCI has recovered by 10.2 points compared to Q3 2019. Expectations in the Georgian private sector increased by 9.5 index points, rising to 31.3. Moreover, business performance over the past three months has increased significantly, reaching 26.9 points (up from -0.5), indicating an upturn in production, turnover, and sales. Thus, the rise in both business expectations and past performance has led to an increase in the overall BCI. Compared to the previous quarter, the sales price expectation index has decreased slightly; however, the share of business owners who expect an increase in their sales prices remains high.

The BCI increased in most economic sectors, namely in the retail trade (33.2), construction (28.1), service (8.5), financial (4.6), and manufacturing (3.8) sectors. One exception was agriculture, in which the BCI declined by 33.4 index points. Business confidence in the fourth quarter of 2019 has dropped for SMEs (-1.5), though it has increased for large firms (12.6).

Past performance: Businesses’ actual performance increased by 27.4 points compared to Q3 of 2019. In Q4, of the 123 firms surveyed, sales (production or turnover) increased from -0.5 (Q3 2019) to 26.9 (Q4 2019).

A significant upsurge in performance was observed in retail trade (85.7), service (36.1), construction (31.7), and finance (13.5). The substantial increase in these sectors highlights that the weighted balance between positive and negative responses increased compared to the previous quarter. In the remaining sectors, production, turnover, and sales for the past three months have decreased: in agriculture (-46.2) and manufacturing (-46.0). Business activities have improved for both SMEs and large businesses.


The expectations index increased by 9.5 index points in Q4 2019. Prospects about the next three months improved for most business sectors; the one exception being agriculture (-38.7). The greatest increase was reported in retail trade (40.3). Business expectations have, on the whole, improved for large firms but worsened for SMEs.

The majority (72%) of the surveyed businesses do not expect any changes in employment over the next three months. Furthermore, only 15% of firms stated that they would hire more employees in the future.

Around 37% of the firms surveyed expect the economic condition of their businesses to improve over the next three months. While, 42% do not imagine any changes in the future, leaving a small proportion of businesses that believe their business conditions will worsen.

Sales Price Expectations

The sales price expectations index decreased from 12.9 points (Q3 2019) to 11.3 points (Q4 2019). The descent is mostly driven by a decline in the agricultural and service sectors. While, the overall sales price expectations index has decreased moderately for both SMEs and large companies.

Around 65% of all firms surveyed are not intending to change their prices over the next three months. Only 6% of firms expect to decrease their prices, and the remaining 29% will consider increasing their prices in the future.

A lack of demand and limited access to financing continue to be the most significant obstacles, particularly for SMEs. Large companies also mention a shortage in the labor force as a further hindrance.

It should be noted that the present BCI results may be overestimated, as the survey only covers businesses currently operating and not those that have already exited the market. Accordingly, firms still in operation are, to some extent, more likely to have a negative outlook.

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