CONSUMER SPENDING IN GEORGIA

Elisa Perry

Consumer spending is varied in Georgia depending on households’ perceptions of their economic standing and ability to purchase certain goods. The Caucasus Barometer, a nationwide survey conducted by the Caucasus Research Resource Center (CRRC) in 2009, demonstrates in part the importance of utilizing data to break down trends in consumer behavior. Per the survey, the majority of the Georgian population does not believe that they have enough money for certain “durables,” expensive but necessary goods that help people to go about their daily lives. However, their skepticism does not seem to be supported by their own consumer spending.

The Caucasus Research Resource Center’s program (CRRC) is a network of resource, research and training centers established in 2003 in the capital cities of Armenia, Azerbaijan and Georgia with the goal of strengthening social science research and public policy analysis in the South Caucasus. The CRRC began a coordinated data collection effort to obtain reliable, comparable data on household knowledge, attitudes and practices across the South Caucasus in the fall of 2003. Since 2006, the survey has been carried out nationwide in each country in both urban and rural areas. Two thousand Georgian respondents participated in the 2009 survey.

The survey shows that fourteen percent of Georgians believe that their household has enough money for food and clothing, but not enough for excess expenditures. Twenty-eight percent of respondents indicate that they have enough money for food, but not enough for clothing. Twenty-two percent of respondents reply that they do not have enough money for food. Only two percent indicate that they have enough money for both food and clothing and can afford durables like a refrigerator.

On the surface that indicates a bleak picture of consumer spending potential. However, a closer analysis suggests that Georgians tend to spend more money on certain household necessities than their negative answers about their wealth would suggest.

Last year in which you purchased a washing machine

Those who say that they do not have enough money for clothing actually spent more than one would expect. For example, 25 percent of these respondents reported that they owned a washing machine. Of this group, 63 percent had purchased a new automatic washing machine in the last five years. Similarly, a high percentage of respondents who said that they had only enough money for food and clothing but not for durables seemed to own these durables nonetheless: 45 percent of respondents from this group indicated that they owned a washing machine. Of this 45 percent, 63 percent had purchased a new washing machine in the previous five years.

Last year in which you purchased a refrigerator

The data on another important household item, refrigerators, also demonstrates an inconsistency in what Georgians believe that they can afford and their actual spending. Of the respondents who indicated that they did not have enough money to purchase clothing, 75 percent indicated that they owned a refrigerator, and of this group, 22 percent stated that they had purchased a new refrigerator in the last five years. Eighty-six percent of respondents that indicated that they did not have enough money for excess expenditures said that they owned a refrigerator, with 30 percent of this group having purchased one in the last five years.

Last year in which you purchased a car

Respondents’ answers about their households’ purchase and ownership of a car also indicates that Georgians’ capacity for spending money on durables is greater than they think. Of those respondents who said that they did not have enough money for clothes, 19 percent indicated that they owned a car. Of this group, 36 percent have purchased a car in the last five years.

It appears that Georgians – even those who consider themselves relatively poor and unable to afford them – purchase a significant amount of durables. What accounts for this inconsistency? The data indicates that one reason that Georgians may believe that that they are unable to afford durables is because they are troubled by the current state of the economy. For example, 24 percent of Georgians are concerned that they will need to reduce their daily spending sometime in the near future, while 15 percent believe that they will need to rely on financial support from their families in the future in order to survive. In addition, when asked how they perceive their financial situation in relation to other Georgians, on a scale of one to ten, answers were moderate to poor: 15 percent believed that their situation was comparable to other Georgians’ (level five), while 12 percent believed that there situation was slightly worse than average (level four) and ten percent believe that their situation was the worst (level one). Less than one percent of respondents indicated that they felt themselves to be on levels eight, nine, and ten.

Another reason for the discrepancy between Georgian actual spending and beliefs about what they can afford may be the inconsistency of income. While households may experience an occasional windfall which allows them to buy a bigger item, these purchases are not in reach throughout the year. Farmers, for example, only receive their income after selling their harvest and may struggle in other seasons. The survey results also suggest that more than one in twenty Georgians collaborates with others to save money for bigger purchases. Seven percent of Georgians participate in a so-called “money lottery,” in which a small group of people pay into a private lottery each month and receive a payout at a predetermined interval. Thus, individuals may receive a larger sum every few months, allowing them to make a larger purchase.

The data presented in the Caucasus Barometer shows plainly that many Georgians believe that they simply cannot afford certain durable necessities, but are still finding ways of purchasing them. Moreover, these durables have been purchased with relative consistency over the past five years. For a longer term, Georgians are relatively optimistic: 30 percent of Georgians believe that their children will be better off financially than they are.

Elisa Perry is currently a summer fellow at the Caucasus Research Resource Center and a second-year Masters student at the Fletcher School of Law and Diplomacy at Tufts University in the United States, focusing on security studies and the Caucasus. She holds a BA from the George Washington University, where she studied international relations. Prior to graduate school, Elisa worked as an aide to the United States House of Representatives’ Committee on Foreign Affairs, where she focused on U.S. relations with international organizations and international human rights issues.  Her research interests include post-Soviet state security, NATO and public international law.

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