Oil effect – food prices during the pandemic

09.06.2021 3 Min Read
Oil effect – food prices during the pandemic

As the Coronavirus pandemic started, economic downfall made society face threat of unemployment and loss of incomes. Drastic decrease of incomes is directly connected to purchasing capacities and considering tendency of growing prices on food products, the picture is not that pleasant. It’s a fact, that this situation hits low income families the most who spend the majority of their incomes on food.


When compared to the previous year, prices on food globally increased by 14% in 2021 (World Bank, Food Price Index 2021), Georgia did not fall behind this negative tendency. In April of the current year, ACT got interested in the impact of increased prices and inquired respondents on the dynamics of costs spent on food and frequency of using different products over the past 6 months.


Growth rates 


In the spring time, social media was overflowed by record growth of oil price and this became a popular topic for discussions or jokes. Even though the price of oil reached its historic maximum price since 2008, unfortunately, oil was not the only main character in this story and the pandemic appeared to be pushing prices up and up on food products. Based on National Statistics Office of Georgia, prices in food category went up by 0.3% in April compared to the previous month which was reflected in 0.1% growth in 7.2% inflation rate. In good categories, prices of fruit and oil, fish and sweets showed the biggest growth rate:  


The majority of 401 respondents we inquired, confirmed drastic increase of prices and declared that they have to spend more and more on food recently. If we look at data in age perspective, the picture is similar for all age groups – the majority of respondents (averagely 75%) in 18-34, 35-54 and 55+ age groups report on noticeable growth of prices in food category over the past 6 months.


According to the study results, the most frequently used products (everyday, several times a week) include bread and bakery, vegetables, fruit, dairy products and sweets for the majority of respondents. Relatively less frequently consumed products are frozen and canned meals, fish and oil, butter, sugar and cheese. If we compare this list to the dynamics of prices provided by GeoStat, we’ll see that most frequently used food products are now more expensive. The products listed below take the majority of space in consumer basket according to frequency of use.


Impact of the shock


To sum up briefly, the pandemic and its negative effects on the economy was not unexpected – breach in food supply chain and delaying processes logically follow similar crisis. The Coronavirus pandemic caused delays in functioning of global food value chains, which affected every phase of food supply. This all originated from the restrictions and regulations set in forth by governments of different countries.


For now, food prices have to cope with the shock caused by the pandemic. Prices increase from month to month, as well as annually. Even though developing, food importer countries are number one target for price growth caused by the pandemic, however, in import-depended Georgia where other external economic factors are actively making impact, including depreciation of the national currency, growth of prices on food products is even more evident and noticeable.


Author: Lika goderdzishvili
Portfolio lead, development consulting


Featured Insights
03.06.2021

COVID-19 outbreak caused one of the most severe crisis in the history of mankind and entire world still tries to cope with it. As of now, number of infected individuals exceeds 158 million, while number of deaths caused by the virus is more than 3,2 million. The pandemic changed entire world and alongside, severely affected all the existing industries. Its results were reflected in global economic recession, including bankruptcy of small and medium businesses, increase of unemployment rate, crisis in tourism sector, record fall on stock exchange, etc.


Economic recession during the pandemic 


Global economy was severely hit which was caused by regulations set in forth for prevention of the virus outbreak. As soon as the pandemic started, it drastically changed lifestyle, occupation and in general, our everyday life. Soon enough, the majority of countries announced strict lockdown as the most effective tool against the virus and social distancing as the best way to protect each other. These regulations made huge impact on the global economy and left millions of people jobless. According to the 2020 report issued by World Health Organization, 114 million individuals were left without job all over the world this year. In total, 8.8 percent of global working hours were lost throughout the year which is equivalent to 255 million full-time work. The given rate is approximately 4 times higher compared to working hours lost as a result of global financial crisis in 2009. Loss of the resource on labor market was naturally caused by bankruptcy of companies or compulsory slim down of personnel. In 2020, Gross Domestic Product globally decreased by 3.7 trillion USD, which equals 4.4. percent decrease. Process of economic improvement is particularly hindered by regulations related to social distancing which were set in forth due to airborne transmission of the virus.

 

Immunization as the way of survival 


Work on Covid-19 vaccines started in different labs as early as in 2020 and as for today, vaccination process is actively implemented in the majority of countries. In order to restore social gatherings and return to office space, it is clearly most important to minimize health-related risks. At this point, this can be achieved only with help of herd immunity, which means that more than half of country/world population needs to be resistant to the virus. Only mass vaccination will make it possible to achieve this goal. However, it is a fact that generation of herd immunity requires significant period of time and medical resources. In addition to this, there is lack of citizens’ readiness to get vaccinated which sometimes prolongs the said process even more. All these, added up together results in delayed immunization process and economic recession goes on indefinitely.




Potential effect of mass immunization 


More than 2,02 billion doses of vaccine are used in the world and more than 443 million people are fully vaccinated. More than 11 percent of world population is vaccinated at least once and 5,7 percent of population is fully vaccinated. Even though it takes certain amount of time after mass vaccination to generate herd immunity, but looking at the examples of some of the countries, we can already speak about first results and positive tendencies coming from vaccination.




Israel holds the leading position in population immunization process where more than 63 percent of citizens have at least one dose of vaccine and more than 56 percent of citizens are fully vaccinated. This enabled the country to generate herd immunity and restore activities in public spaces or offices which will definitely make its impact on the economy. Vaccination level is so high in Israel, that it is no longer required to wear a mask outdoors and regulations are significantly lighter. In addition, schools are now open and fully vaccinated people can freely visit restaurants, attend cultural and sports events, concerts in large halls and celebrate religious holidays in mass gathering spaces. As a result of relaxed regulations resulted from vaccination, service field has already started working in the country and companies operating in this sector already make their first steps to cope with financial crisis.



51 percent of population in United States of America got at least one dose of vaccine  and more than 41.5% is fully vaccinated. Part of strict regulations are abolished, including: fully vaccinated people are allowed not to wear a mask indoors and outdoors unless it is required by the law of the specific state. In addition, it is no longer compulsory to do COVID test or stay in self-isolation for domestic or international travels. This helps to revive the tourism and allow companies and their employees operating in this sector to go back to economic activity.



With help of high level of vaccination, these countries manage to open economy, restore everyday activities and enable business sector to work fully – this supports generation of new jobs and is the first step to restoring country’s economy.


From tough challenges to new opportunities 


We all know the world before the pandemic, but we can only assume what it will be like after the pandemic is over. Based on past experiences of overcoming crisis situations, such was big depression in 30ies, global economic crisis after World War II, economic recession after the collapse of Soviet Union or world financial crisis in 2009-2010, together with world leading analysists/experts we can assume that the end of this pandemic will be followed even more changes:


Altered consumer behavior – the pandemic has already drastically altered consumer behavior and this change will become even more distinct in long-term perspective. When coping with instability, people had priorities, requirements and values shifted. Consumers’ expectations towards companies will change, they will want new way of receiving service and purchasing products. Respectively, companies will have to remodel their working methods and presumably, role of e-commerce, remote services and automatization of processes will grow even bigger in future.


Labor market – remote format of work provides new challenges and opportunities for employers and employees. Nowadays, more and more employees have a desire to work remotely or choose hybrid format of work implying shift of remote and office formats. It is presumable, that employers will consider switching their employees to remote format in the post-pandemic era which will enable them to cut costs.


Business sector – many industries face inevitable changes and in order to cope with the pandemic, companies had to beat off rather painful hits. Such change of the environment pushed businesses to revise their strategy. Traditional methods of doing business turned out to be ineffective in many industries, while business companies showed insufficient flexibility and adaptation ability. Companies like that will have to develop renewed business models, remodel their strategies and adjust to new requirements of consumers which need to be appropriate to the post-pandemic era as well.


Digital era – digitalization process of business sector started even before the pandemic, but COVID-19 outbreak drastically accelerated this process. Digital transformation is inevitable in today’s reality and its need will be even more obvious after the pandemic is over. It was digital technologies that made it possible to remotely work, study and in general, communicate in a new way during the pandemic. Intense investment in the sector of digital technologies will continue after the pandemic too and new services or completely new industries will inevitable emerge.


The Coronavirus Pandemic made the mankind face a variety of challenges and opportunities at the same time. Fighting against the virus is a complex process where you can only gain advantage through joined forces. In the process of coping with the pandemic, economic rates may get equal or even exceed pre-COVID results, but considering its tremendous size, the pandemic thoroughly changed external factors and people’s mindset as well. Even though no one knows for sure that the new world will look like, but it is vitally important for all of us to realize that mass vaccination is not a simple solution to the problem and key to improve global/local economic condition. Vaccination just gives us a chance to live with fewer regulations, return to social space and restore economy with our bare hands. To say it in other words – mass vaccination will help us pass the road together from immunization of population to regeneration of economy.


Author: Saba Khergiani 

Junior analyst, management consulting


26.05.2021

Public opinion polls conducted in recent years clearly show the positive attitude of the Georgian population towards European and North Atlantic integration. At the same time, for the last two decades, the Georgian authorities have always confirmed the country's aspirations towards European institutions. Moreover, the current government has loudly stated that the country is preparing to apply for EU membership by 2024. There is an expectation that this promise was made in advance coordination with European partners, which increases the expectation of a positive outcome.


One of the most effective tools for rapprochement with the EU is the Eastern European Partnership political initiative, which aims to deepen and strengthen relations between the EU member states and their six eastern neighbors: Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine. The Eastern Partnership platform, on the one hand, enables countries to join efforts to move closer to European institutions, on the other hand, is an effective tool for the EU to assess countries' progress and plan appropriate policies.


At the same time, the European institutions are actively monitoring the population of the Partnership member states and their attitudes towards both European integration and these institutions themselves. Since 2016, ACT has been actively cooperating with international organizations and monitoring public opinion in the Eastern Partnership countries. One such study was conducted in the spring of 2021, the results of which allow us to draw interesting conclusions about the attitudes and preferences of the population, as well as the different picture in these six countries.


63% of Georgia's adult population is positive about the EU


According to a survey conducted by ACT in all six Eastern Partnership countries in March 2021, the majority of Georgia's adult population (aged 15 and older) is positive towards the EU and, as it turns out, Positive attitude of Georgian population is the highesе among the six Eastern Partnership countries. Interestingly, the number of neutrals is not small either (35%), while only 1% evaluate this institution negatively.


What is your attitude towards the European Union? (%)


Source: Eastern Partnership Public Opinion Survey, 

Sampling Size - 6000 Respondents, March 2021, ACT

 

The majority of Georgia's adult population (76%) trust the EU, regardless of whether they like the institution Interestingly, there are even more people who may not like this European institution, although the fact is, they still trust it. In this regard, the level of trust in the European Union is the highest among the population of Georgia.


The results of the public opinion poll in the Eastern Partnership countries have already been heard in Brussels, at the Eastern Partnership and EU headquarters. It is also planned that by 2024, ACT and its international partners will provide Brussels with the results of a survey of the population of all six countries each spring. Ultimately, time will tell the results of the Eastern Partnership countries in fulfilling their commitments to the European institutions.









Confidence in the EU (%)

19.05.2021

When entire country was impatiently waiting for WHO authorization on Sinopharm vaccine, that was exactly when we decided to conduct another study which would clarify reality related to vaccination among Tbilisi residents and enabled us to compare collected data with the picture received 2 months ago. May in this maze, we would be able to have better understanding what Tbilisi residents think about vaccination and identify their readiness to get vaccinated, to find out what happens to us if we continue moving forward at this pace. 

Whole world today tries to cope with the Coronavirus with the only weapon available – vaccine. This fight entered active phase and based on international research center Bloomberg, more than 1,48 billion doses of vaccines have been distributed in 176 countries all over the world. This means that approximately 24.5 million citizens get vaccinated a day. [1]


Source of information for Tbilisi residents 

In order to identify attitudes towards vaccination among Tbilisi residents, research and consulting company ACT conducted two studies before the country got its first batch of vaccine (in February) and 2 months later (in April). [3] It is interesting to see what were expectations of our citizens and what is going on today, when vaccination has started.


Unlike the study conducted in February, awareness level of Tbilisi residents in regard with vaccination increased by 33% in April. This time around, 70% of citizens reported on being sufficiently informed about Coronavirus vaccination and expressed readiness to make a decision. Even though main sources of information remained the same in both studies: internet, television and friends/family, the second inquiry showed slight increase (by 6%) in case of television (total of 67%) and 11% increase when naming friend/family (total of 26%).


If we have a look at age groups, we will discover that 80% of 55+ citizens prefer television as a source of information, while internet is number one choice for 87% of 18-34 age group. it is quite interesting that rate of listing friends and family as reliable source of information equally increased in all age groups, which is presumably result of recommendations provided by vaccinated citizens.


Main barrier against vaccination 


The majority of Tbilisi residents expect that their turn to get vaccinated will be in 2022 and expectations have slightly changed compared to the previous wave. 79% of Tbilisi residents believe that vaccination undoubtedly is the only way to improve epidemiological situation.


Readiness of citizens to get vaccinated increased by 7% compared to the previous wave and now 45% of Tbilisi residents are ready or is certain to get vaccinated. It is interesting that readiness to get vaccinated is most actively expressed among citizens that belong to 35-54 age group (48%) and almost every second citizen in this age group is ready to get vaccinated. However, regardless of this slight increase, 44% of respondents still hesitate (either undetermined to get a vaccine or against vaccine) and main reason they provide is overall distrust towards vaccines and possible side effects.


It is also worth mentioning that compared to the previous wave, fear of possible side effects increased by 6% and reached 38%. On one side, it is logical and connected to a few cases when vaccination procedure resulted in drastic deterioration of patient’s health or death both worldwide and in Georgia. However, on the other hand, it seems to be arguable because in some cases connection between these two facts has not been confirmed and everything is based on opinions and presumptions. Death of a newly vaccinated citizen in Georgia soon after the vaccination process started in the country, was directly connected to vaccination process and the specific vaccine. Afterwards, investigation that started against the doctors involved in this specific case revealed signs of belated medical response, but delayed and ambiguous communication of this fact could not fully obviate objections towards the established perception. That was the reason why the majority of respondents abstained from getting Astra-Zeneca vaccine.


As the world experience demonstrates, one of the important factors that assist continuous process of vaccination is extensive information campaign and mobilization. Israel is the perfect example – this country managed to fully vaccinate 56,3 percent (5,09 million) of its citizens and become a green zone in five months. Israel started vaccination campaign as early as December 19 of 2020 when Prime Minister Benjamin Netanyahu vaccinated on live TV and led the information campaign where he answered every question Israeli citizens had in regard with vaccination in video clips. In less than two weeks, more than 10% of citizens had already had their first shot of vaccine.


About preferred vaccines


Our country uses 3 types of vaccine: American Pfizer (since March 30), British Astra-Zeneca (from March 15) and Chinese Sinopharm (since May 4). It is interesting to have a look at attitudes of Tbilisi residents in regard with each vaccine. It turned out that:


The most trusted vaccine is still Pfizer - 27%, followed by Astra-Zeneca – 15% and Moderna – 15%. The least trusted vaccines are Sputnik – 4% and Sinopharm – 4%.


Number of respondents who sharply refuse to get Astra-Zeneca vaccine increased by 14% compared to the previous wave. Barriers against getting Astra-Zeneca include possible side effects (33%) and lack of information (26%) in case of Chinese vaccine. Regardless, it’s a fact that as early as on May 4, before Sinopharm was authorized by WHO (this vaccine got authorization on May 7), the vaccination booking platform almost had no free spots. Such a big demand on Sinopharm can be explained by two possible reasons: first – citizens were confident that Sinopharm would most likely get authorization and booked their appointment in advance and second – authorized or no, it was most important for citizens to see vaccination process getting started and return to ordinary life. Number of citizens registered to get the said vaccine is 25000 as of today. Booking portal can no longer handle the traffic, demand on vaccine is higher than the available limit which once again confirms readiness of certain part of citizens. They realize that vaccination is the only way to survive and they may waste time waiting for the preferred vaccine. Time, that is too valuable in the pandemic.


In search of the way out from the maze 

We asked Tbilisi residents to tell us whose opinions do they take into consideration most of all. The following groups were identified:

  1. Health professionals - 49%
  2. Familiar, competent health professional - 27%
  3. Family/relatives/friends - 19%


Compared to the previous wave, share of considering what health professionals recommend decreased by 10%, while share of taking opinions provided by family/relatives/friends into consideration has increased by 11% which once again confirms the importance of increasing number of vaccinated citizens. It turns out, that increased number of vaccinated acquaintances automatically increases number of those who are eager to get vaccinated.


As the study demonstrates, citizens made up their mind to do pre-vaccination preventive diagnostics and be ready for the vaccination procedure. 90% of respondents plan on visiting immunologist, 86% plans on doing blood test, while 83% of respondents want to get coagulation test to check the blood clotting system.


Based on the study, we can conclude that attitudes of Tbilisi residents towards vaccination have changed after 2 months since the process started. We see increased readiness of citizens to get vaccinated and an effort to find the way out from vaccination maze: get vaccinated with available vaccines, do pre-vaccination procedures, retrieve information from different sources on their own not to lose what matters the most – the only chance to return back to normal life.

 

Author: Tatia Bregvadze

Analyst, ACT Research

 

 

[1] https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribution/

[2] https://stopcov.ge/

[3] შემთხვევითი შერჩევის პრინციპით პირველ ტალღაზე თებერვალში ჩატარდა 414, ხოლო მეორე ტალღის ფარგლებში,  აპრილში – 401 სატელეფონო ინტერვიუ.

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