The FINANCIAL -- According to a nationally representative sample of 367 individuals undertaken in early October 2017, ISET’s CCI index added 0.2 index points, rising from -19 in September to -18.8 points in October. Similar tiny movement was observed in both sub-indices: the Present Situation Index improved by 0.3 index points (from -24.1 to -23.8) and Expectations Index by 0.1 (from -13.9 to -13.8) compared to September.
However, the change in CCI is neither small nor positive when compared to last year’s levels. The Index lost 8 index points (from -10.8 to -18.8) in yearly terms. In line with a well-established trend in global consumer confidence research, last year’s parliamentary elections, held in October 2016, provided a major boost to consumer confidence in the three months just prior and immediately after the voting day. Given the lesser significance of Georgia’s municipal elections held this year, no similar pattern has been observed in either September or October 2017.
While September saw a major gap in consumer confidence emerging among the seemingly happy Tbilisi and rest-of-Georgia, the trend was reversed in early October (before the beginning of the recent lari devaluation). Tbilisi lost 4.1 index points (from -12.6 to -16.7), whereas rest-of-Georgia gained 4.5 points, going up from -24.8 to -20.3. At least to some extent, this could be attributed to the beginning of grape harvest period, Rtveli, and a sharp increase in the consumption of alcohol in Georgia’s countryside.
THE ASIAN PARTY POOPER…
Unfortunately, the mood is not as festive in Western Georgia, where the entire agricultural sector has been devastation by the infamous stink bug or “pharsona” as it is known in Georgia is (see our most recent blog article: “Asian Invasion: Stink Bug in Georgia”). As we show below, the entire improvement in rest-of-Georgia’s Consumer Confidence is associated with wine festivities in Kakheti and elsewhere in Georgia’s east. October CCI in Georgia’s east saw an almost 11 point improvement in just one month, exceeding its level in Tbilisi. At the same time Georgia’s west (and in particular its predominantly rural areas in Imereti, and hazelnut-heavy Samegrelo and Guria) continues to lose confidence. After taking a big hit in September, Western Georgia’s CCI lost another point in October, reaching -23.4 index points, well below the levels of CCI observed in Tbilisi and the east, where wine festivities have not been interrupted by any Asian invaders. In fact, according to National Wine Agency of Georgia, this year’s harvest was better than last year’s. In September alone, Georgia harvested almost 126,000 tons of grapes which were processed into wine. Given higher grape prices (affected by stronger demand for Georgian wine in Russia, China and other traditional markets), farmers revenues increased by a hefty 49mln GEL.