For the fourth quarter of 2020, BCI decreased by 18.7 index points and reached -28.6 after a significant improvement in the previous quarter. 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 Q4 2020, is driven by significantly pessimistic future expectations – ISET-PI wrote in its latest Business Confidence Index.
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 Q3 2020, and reached -40.4 in Q4 2020. “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 Q3 2020, reaching new historic low, -41.7 points. According to ISET-PI, for Q4 2020 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” – ISET-PI found.
“For Q4 2020 access to finances and lack of demand became 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”.
