The Business Association of Georgia (BAG) Index reports that 75% of the surveyed companies claim that volatility of national currency exchange rate is the most hindering for business activity than other business regulations.
In Q3 of 2021, similar to the previous quarter, the volatility of the national currency exchange rate was cited as the top factor hindering business (68% of surveyed companies cited this factor as the most hindering). It was cited by 78% of companies in the manufacturing sector, 74% of in the trade sector, 67% in the construction sector and 62% in the service sector.
In Q3 2021, compared to Q2 2021, among the factors hindering business activity, the share of companies citing volatility of national currency exchange rate and legal and administrative barriers as hindering factors decreased the most, each by 8 percentage points. While the share of companies citing labor shortage as a hindering factor increased the most (8 percentage points).
It should be noted that until Q3 of 2021, the issue of a labor shortage was not cited among the five most hindering factors. Since Q2 of 2021 however, the share of companies citing a labor shortage as a hindering factor has been increasing though. Moreover, it should be noted that the share of companies citing weak demand as a hindering factor has been decreasing in recent periods: in Q4 of 2020, 78% of companies cited this as a hindering factor, while in Q3 of 2021 this had reduced to 34%.
In Q3 of 2021, the regulatory environment is the main reason why legal and administrative barriers are named amongst the factors hindering business activity. This impediment was followed by the restrictions imposed to mitigate the impact of COVID-19. It is noteworthy here that compared to the previous quarter, in Q3 of 2021, the share of companies to cite COVID-19-related restrictions as a hindering factor decreased significantly (by 35 percentage points), while the share of companies citing the regulatory environment as a hindering factor increased the most (by 14 percentage points).
