Consumer Confidence in Lebanon at Near Summer Low

By T.K. Maloy                   

BEIRUT – After consumer confidence in the economy hit a near all-time low this summer as Lebanon entered a recession, 2012 wrapped up with confidence close to the previous quarter’s low after a brief fall rebound.

The Byblos Bank/AUB Consumer Confidence Index reported Sunday that for December the measurement posted a confidence rate of 31.9  after touching a near record low 27.2 in August 2012, the second-lowest level since the start of the index’s calculation in July 2007.

The reasons were myriad, according to Byblos Bank, including various political, security and economic factors listed as causing consumer pessimism.

In its regular economic report, “Lebanon this Week,” the bank said that research analysis of the results indicates that domestic political tensions, repeated security breaches, the resurfacing of political assassinations and assassination attempts, lax public health safety and  the slow-moving decision-making process within public institutions, were key factors causing lack of consumer confidence in the economy.

Additionally, the weekly report noted that direct and indirect spillovers from the increasing violence in Syria affected the famous resilience of Lebanese consumers.

It added that the counterfeit medicine scandal, the rolling electricity blackouts and the protracted issue of the public-sector salary scale also affected consumer sentiment.

The weekly report added, however, that lone event that had a positive but brief impact on consumer sentiment was the resumption of the National Dialogue among political parties after an 18-month interruption, and the subsequent issuance of a comprehensive statement, the Baabda Declaration, which pledged to address citizens’ concerns.

“Consumer confidence is neither immune nor resilient to chronic security deterioration and heightened political uncertainties. Security and safety-related issues dominated consumers’ concerns throughout 2012,” said Nassib Ghobril, chief economist, Byblos Bank. “But other powerful issues such as rising political rhetoric and uncertainties, the inability of authorities to satisfy citizens’ basic needs, the rising cost of living, decaying public services, the weak rule of law, and economic stagnation resonated strongly among consumers.

The Byblos economist added that, “Consumer sentiment remained at such low levels in the second half of 2012, that consumers require a positive political shock of the magnitude of the Doha Accord, and not just a change in government, in order to restore their confidence to the levels of 2008, 2009 and even 2010.”

In additional negative news, the Byblos Bank/AUB Present Situation Index and the Byblos Bank/AUB Expectations Index moved downward for the last quarter of the year, with the bank reporting that both indices posted their second-lowest readings in 22 quarters in the fourth quarter of 2012, which reflected the deterioration of confidence in current as well as in future conditions.