Byblos Bank Headquarters, Wednesday, February 3, 2016: Byblos Bank issued today, in cooperation with the Olayan School of Business at the American University of Beirut, the results of the Byblos Bank/AUB Consumer Confidence Index for the second half of 2015.
The results show that the Byblos Bank/AUB Consumer Confidence Index declined by 5% in July, grew by 12% in August, dropped by 13% in September and by 1% in October, while it improved by 3.4% in November and regressed by 7.2% in December 2015. Further, the Index averaged 39.5 in the third quarter, nearly unchanged from the second quarter of 2015, and decreased by 6.7% to an average of 36.9 in the fourth quarter of 2015. The deterioration in the fourth quarter of 2015 was reflected in the answers of consumers to the Index’s survey questions; only 2.5% of the surveyed Lebanese in the fourth quarter of 2015 said that their financial situation is “better off” than it was six months earlier, the lowest such quarterly percentage since the Index’s inception in July 2007. In contrast, 78.2% of the surveyed Lebanese said that their financial situation is “worse off” than it was six months earlier, and 19.3% stated that their financial situation remained the same. Further, the Index posted a monthly average of 38.1 in the second half of 2015, down by 1% from the first half of the year.
Mr. Nassib Ghobril, Chief Economist and Head of Group Economic Research and Analysis Department at Byblos Bank, indicated that political and security issues continued to be the main reasons for the low level of consumer confidence in the country, adding that socioeconomic developments also took their toll on household sentiment in the second half of 2015. “The repeated failure of the Lebanese Parliament to elect a President and the paralyzed decision-making process within public institutions, which has reached the Council of Ministers, maintained household confidence at low levels.“ He added that “the persistent spillovers from the Syrian conflict held back sentiment during the third and fourth quarters of 2015”. He noted that “on the socioeconomic level, the outbreak of the waste management crisis in July 2015 had a significant impact on consumer sentiment, as it highlighted the inability of the government and political parties to properly manage and deliver basic public services.”
In parallel, Mr. Ghobril considered that several positive developments helped support consumer sentiment in the third and fourth quarters of the year: “On the political front, generally stable security conditions across the country, the ongoing countrywide crackdown on suspected terrorists by security forces, and the continued dialogue between various political parties prevented consumer sentiment from deteriorating further during the second half of 2015. On the economic front, the positive impact on households’ budgets from the drop in local gasoline retail prices and the fading away of imported inflation gave some reprieve to wary consumers.”
Further, the Byblos Bank/AUB Expectations Index posted higher values than the Present Situation Index during each of the last six months of 2015, in line with the first half of the year. However, Mr. Ghobril cautioned that “the results do not reflect a shift in households’ attitudes, as only 7.6% of Lebanese polled in the fourth quarter of 2015 expected their financial conditions to improve in the coming six months, while 69% of them believed their financial situation will deteriorate, and 21% stated that their financial conditions will remain the same.” He added that “only 3.7% of the surveyed Lebanese during the fourth quarter, expected business conditions in the country to improve in the following six months, the lowest such quarterly percentage since the Index’s inception; while 78.2% projected the business environment to deteriorate and 15% forecast business conditions in Lebanon to remain the same.”
The results of the Byblos Bank/AUB Consumer Confidence Index for the second half of 2015 remained consistent with the ongoing trend of low household confidence since the first half of 2012, as the second-half results constituted the Index’s seventh-lowest level in 17 semi-annual readings.
The results of the Byblos Bank/AUB Consumer Confidence Index for the second half of 2015 show that female consumers had a relatively higher level of confidence than their male counterparts; while consumers in the 21 to 29 year-old bracket posted a higher level of confidence than citizens in other age brackets during the covered period. Also, households with an income of USD 2,500 or more per month continued to have a higher level of confidence than those earning less. Moreover, students had a higher level of confidence than housewives, private sector employees, the self-employed, the unemployed and public sector employees, in the second half of 2015. In addition, consumers in South posted the highest confidence level across administrative districts, or mohafaza, in the second half of the year, followed by consumers in Mount Lebanon, the North, the Bekaa and Beirut. Further, Christian consumers had a higher level of confidence than those from other religious affiliations during the covered period, followed by Shiite, Sunni, and Druze consumers.
In parallel, the results of the Byblos Bank/AUB Consumer Confidence Index for the full year show that household confidence improved in relative terms in 2015, as the Index posted a monthly average of 38.4 in 2015, increasing by 12.4% from 34.1 in 2014. However, the increase is also due to low-base effects and does not denote a reversal of trends, as the level of consumer sentiment in 2015 reflected a decline of 60.3% from the Index’s peak year of 2009 and a decrease of 30.5% from the Index’s monthly trend average since July 2007.
Mr. Ghobril noted that “the results of the Byblos Bank/AUB Consumer Confidence Index for 2015 clearly reflect citizens’ low confidence in the seriousness of the government and political parties to bring about real stability and change, as well as to improve their living standards and to provide a credible framework for economic opportunities.” He added: “persisting issues such as the inability of authorities to satisfy citizens’ basic needs, decaying public services, the weak rule of law, job insecurity, and economic stagnation dominated consumers’ concerns during the year.
The Byblos Bank/AUB Consumer Confidence Index is a measure of the sentiment and expectations of Lebanese consumers towards the economy and their own financial situation. The Index is compiled, implemented and analyzed in line with international best practices and according to criteria from leading consumer confidence indices worldwide. It is composed of two sub-indices, the Byblos Bank/AUB Present Situation Index and the Byblos Bank/AUB Expectations Index. The first sub-Index covers the current economic and financial conditions of Lebanese consumers, and the second one addresses their outlook over the coming six months. In addition, the data segregates the Index based on age, gender, income, profession, administrative district, and religious affiliation. The Index has been calculated on a monthly basis since July 2007, with January 2009 as its base month. It is based on a nationally representative survey of 1,200 face-to-face interviews with adult males and females living throughout Lebanon. The monthly field survey is conducted by Statistics Lebanon, a market research and opinion-polling firm.