The Business Association of Georgia (BAG) Index is a joint product of the Business Association of Georgia, PMC Research Center and the ifo Institute for Economic Research. PMC Research Center publishes the BAG Index on a quarterly basis.
In 4Q20, the share of surveyed companies to claim that there are factors hindering their business activity increased again and reached 78.7%. “This increase was expected, as recently businesses have experienced the negative impacts of the ongoing pandemic even more severely. It is worth noting that the share of surveyed companies to state that their business activity was hindered by a lack of demand increased by 10 percentage points” – the BAG Index explains.
In 4Q20, as in previous periods, four most important factors hindering the business activity are: weak demand for products and services; legal and administrative barriers; lack of specialists; and financial constraints. “Weak demand remained the most prominent factor in this regard. As mentioned above, this factor intensified in 4Q20 and was cited by 78% of respondents. Meanwhile, legal and administrative barriers was cited as a hindering factor by 56% of respondents, which represents an 8 percentage points increase compared to 3Q20” – reads the recent report from BAG.
In 4Q20, the majority of surveyed BAG members to name “legal and administrative barriers” as a factor hindering their business activity cited the regulatory environment as the major reason. These figures are very similar to those of 3Q20.
As for the financing, the BAG Index shows that in 4Q20, the share of companies to name financial constraints amongst the factors hindering their business activity decreased by 6 percentage points compared to the previous quarter (dropping from 23% to 17%). The share of companies to attempt to access finance also decreased in 4Q20, which could be explained by reduced business activity.
Despite the fact that in 4Q20 the share of companies to name financial constraints as a factor hindering their business activity decreased, 31% of surveyed companies that tried to access finance recently named access to finance as a problem. It is worth noting that in the period of 4Q19 – 4Q20 the proportion of companies stating that access to finance was a problem peaked in 1Q20 (47%).
“The current business environment, worsened economic indicators, and fluctuations of the national currency against the USD all contribute to negative expectations. In 4Q20, compared to 3Q20, the share of the surveyed companies expecting the national currency to depreciate increased from 67% to 70%. However, the share of companies with positive expectations also increased and reached its highest figure for 2020 (11%)” – reads the recent report from BAG.
The BAG Index summarizes the BAG Business Climate and BAG Employment Barometer, which are calculated according to the assessments of the top managers of BAG member businesses.
The report also includes analysis of the impact of COVID-19 on the members of BAG.
