Printer Friendly

Consumer sentiment improved in first half 2015.

Summary: Consumer sentiment in Lebanon improved slightly during the first half of 2015, as the Byblos Bank/AUB Consumer Confidence Index was nearly flat in the first quarter of the year and picked up modestly in the second quarter of 2015.

BEIRUT: Consumer sentiment in Lebanon improved slightly during the first half of 2015, as the Byblos Bank/AUB Consumer Confidence Index was nearly flat in the first quarter of the year and picked up modestly in the second quarter of 2015.

"The index posted an average monthly value of 38.5 during the first half of 2015, constituting an increase of 10.4 percent from the second half of 2014, and reached its highest level since the second half of 2011," according to a report issued by the Byblos Bank Economic Research and Analysis Department.

The index reached 35.3 in the January 2015 survey, down by 2.8 percent from 36.3 in December 2014. It further decreased by 2 percent to 34.6 in February but jumped by 25 percent to 43.2 in March 2015. The index registered 38.1 in the April 2015 survey and decreased by 12 percent from the previous month. It then grew by 4.2 percent to 39.7 in May and by 1.6 percent to 40.3 in June 2015.

The Byblos Bank/AUB Consumer Confidence Index averaged 37.7 in the first quarter, nearly unchanged from the fourth quarter of 2014, and increased by a modest 4.3 percent to an average of 39.3 in the second quarter of 2015.

"This was due in part to the stable security conditions and to the ongoing countrywide crackdown on suspected terrorists by security forces," the report said.

Moreover, the report added that the start of an informal political dialogue in November 2014 between the Free Patriotic Movement and the Lebanese Forces Party led to the signing of the "Declaration of Intent" in May 2015 which gave households a sense of relief.

In parallel, the positive impact on households' budgets of the 30 percent drop in local gasoline retail prices and of the steep reduction in telecom tariffs, as well as the acceleration of the Health's Ministry food safety campaign, helped improve the outlook of consumers during the first half of 2015. This caused the Byblos Bank/AUB Expectations Index to post higher values than the Byblos Bank/AUB Present Situation Index in each of the first six months of the year.

Also, the gap between the Expectations Index and the Present Situation Index shifted from a negative spread of -8.3 percent in the second half of 2014 to a positive spread of +19.5 percent in the first half of 2015.

"The shift from a negative to a positive gap between the Expectations Index and the Present Situation Index reflects the impact of relatively better security conditions, as well as the effects of the political dialogue between major parties in the country, and the slight increase in households' purchasing power," the report said.

However, it added, multiple negative factors held back confidence of Lebanese consumers during the first half of 2015. Fears in January 2015 that clashes between Hezbollah and Israeli forces on the southern border would escalate into a wider military confrontation, as well as security breaches in Tripoli, curtailed the confidence level of Lebanese consumers during the first quarter of the year.

Also, the standstill on the issue of the Lebanese soldiers abducted by terrorist groups since August 2014, in addition to the Lebanese Army's military confrontation with extremist groups near the border with Syria in January, March and April 2015 served as a constant reminder of the spillovers from the protracted Syrian conflict.

In turn, these developments exacerbated households' anxieties during the covered period.

Moreover, it said that the ongoing presidential vacuum trickled down to paralyze the functioning of various government institutions, including Parliament. "The persistent failure of the legislative branch to fulfill its constitutional duty throughout the first half of 2015 plunged the already fractious political process into disarray and raised the level of political uncertainties, which took its toll on household sentiment," it added.

As such, 79.7 percent of the surveyed Lebanese said that their financial situation is still "worse off" in the second quarter of 2015 than it was six months earlier, while only 4.3 percent of citizens noted that their current situation is "better off" and 16 percent said that it remained the same.

Overall, the level of the Byblos Bank/AUB Consumers Confidence Index in the first half of 2015 does not bode well for a substantial resurgence of economic activity in the near term.

In fact, consumer sentiment remained at such low levels that we reiterate that Lebanese consumers require a positive political shock of the magnitude of the Doha Accord, and not just the election of a new president, in order to restore their confidence to levels reached in 2008, 2009 and 2010.

"Therefore, we expect economic growth to remain subdued in the absence of any lasting positive political or economic shocks," said the report.

Copyright [c] 2015, The Daily Star. All rights reserved. Provided by SyndiGate Media Inc. ( Syndigate.info ).
COPYRIGHT 2015 SyndiGate Media Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2015 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:Dec 28, 2015
Words:865
Previous Article:Ain al-Hilweh seen as source of security concerns in 2016.
Next Article:Ban Ki-moon and his last statement of the year.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters