Consumer confidence in Lebanon dips in the third quarter

Results reflect the level of frustrations of Lebanese households and the weakening of their expectations

Lebanon's caretaker prime minister Saad Hariri has requested aid from friendly countries to help it secure imports of food and raw materials amid an acute dollar shortage. AP

Consumer confidence in Lebanon deteriorated in the third quarter on the back of the uncertain political and economic climate in the country.

The latest Consumer Confidence Index issued by Lebanese lender Byblos Bank/AUB shows the index regressed by 6.6 per cent in July 2019 from the preceding month, increased by 1.9 per cent in August and declined again by 0.4 per cent in September 2019.

The index averaged 69 in the third quarter, declining 8.3 per cent year-on-year and dropping 2.7 per cent from 70.9 it recorded in the second quarter.

The Byblos Bank/AUB Consumer Confidence Index is a measure of the sentiment and expectations of Lebanese consumers toward the economy and their own financial situation.

Byblos Bank said that the results clearly reflect the level of frustrations in Lebanese households and the weakening of their expectations. Only 3 per cent of those polled in September considered their personal financial conditions to have improved, while 64 per cent of respondents said that their financial situation deteriorated within the previous six months.

“The Consumer Confidence Index has been sending warning signals about the frustrations and receding expectations of Lebanese households since at least June 2017," said Nassib Ghobril, chief economist and head of the economic research and analysis department at Byblos Bank.

The majority of those surveyed said that since mid-2017 their personal financial conditions have deteriorated. The September poll showed that only a fraction believed their personal financial conditions would improve in the coming six months, while most expect it to deteriorate by March 2020. Similarly, sentiments also show that economic conditions have deteriorated since March, with business conditions expected to worsen by March 2020.

Lebanon has witnessed widespread protests for over a month with demands to end nepotism and corruption that have led the country’s public debt to soar to $86 billion, or equivalent to 150 per cent of gross domestic product, one of the highest in the world. Most of Lebanon’s sovereign debt is held by local banks and the financial system underpins an economy that is projected to slow to 0.2 per cent this year, from about 0.3 per cent in 2018, according to the International Monetary Fund.

Reflecting the challenging situation, BLOM Bank's monthly Lebanon Purchasing Managers Index, a survey of conditions in the private sector, last week showed the sharpest decline since the data was first gathered in May 2013. The PMI reached its lowest level since inception in November due to the protests and political impasse.