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Byblos Bank/AUB index: Consumer confidence in Lebanon declines in second quarter 2017
Source: Byblos Bank , Author: Posted by BI-ME staff
Posted: Thu July 20, 2017 1:02 pm

LEBANON. 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 quarter of 2017.

The results show that the Index regressed by 8.5% in April from the preceding month, while it increased by 9.5% in May and surged by 44.3% in June 2017. The Index averaged 54.8 in the second quarter of the year, constituting a drop of 6.3% from 58.5 in the first quarter of the year.

In addition, the Byblos Bank/AUB Present Situation Index averaged 51.5 in the second quarter of 2017 and decreased by 1.8% from the preceding quarter, while the Byblos Bank/AUB Expectations Index averaged 56.9 and declined by 8.9% from the first quarter of 2017.

Commenting on the results, Mr. Nassib Ghobril, Chief Economist and Head of the Economic Research and Analysis Department at Byblos Bank Group stated, "the overall decline in the level of household sentiment in the second quarter of 2017 was due to consumers’ widespread disappointment by the misplaced priorities of the government.”

He added: “Lebanese households had high expectations that the government will put the priorities and needs of citizens at the top of its agenda. Instead, the authorities’ focus since the start of the year on tax increases and on the parliamentary electoral law, at the expense of households’ day-to-day needs, exacerbated consumers' skepticism.”

He noted: "as a result, the Index continued its decline in April after decelerating in each of the first three months of the year, with the April outcome representing a retreat of 38% from the recent peak reached in December 2016."

In parallel, Mr. Ghobril pointed out that “the Index improved in May and especially in June following the renewal of the term of Banque du Liban’s Governor Riad Salameh, as well as the approval of a new parliamentary electoral law.”

But he cautioned that “the improvement of the Index in June is likely due to citizens’ relief that the debilitating and long-running bickering among political parties about the electoral law has finally ended, rather than to real expectations of imminent change in the political system, especially with the deliberate postponement of the parliamentary elections until May 2018."

He added “the disproportionate focus on the parliamentary electoral law should not overshadow the importance of the decision to renew Governor Salameh’s term, as this decision constitutes a key factor for maintaining and improving the confidence of Lebanese households.”

Further, the average monthly score of the Index in the second quarter of 2017 was 48.3% lower than the quarterly peak score of 105.8 registered in the fourth quarter of 2008, and remained 43.3% below the annual peak score of 96.7 reached in full year 2009. But the second-quarter results were 2% higher than the monthly trend average score of 53.7 since the inception of the Index in July 2007, which marks the second time that the quarterly results exceed the trend average since the third quarter of 2011.
Mr. Ghobril also cautioned that "Lebanese households consider that last year's political breakthrough has yet to translate into concrete improvements in their quality of living and economic well-being. So the Index’s increase in June might be temporary if authorities do not fulfill these expectations in the near term, which will close the window of opportunity offered by the current goodwill and relative optimism of Lebanese households."

Mr. Ghobril noted “the results of the Index's survey reflect the prevailing skepticism of Lebanese households, as only 10.3% of the Lebanese polled in the second quarter of 2017 expected their financial condition to improve in the coming six months, while 67.4% of respondents believed that their financial situation will deteriorate and 19.7% forecast their financial condition to remain the same over the covered period of time. In parallel, 10.7% of the Lebanese surveyed in June 2017 expected business conditions in Lebanon to improve in the coming six months, while 62% of respondents anticipated business conditions to deteriorate, down from 75.8% in April and 75.1% in May 2017."

The results of the Byblos Bank/AUB Consumer Confidence Index for the second quarter of 2017 show that female consumers had a higher level of confidence than their male counterparts, and consumers in the 21 to 29 year-old bracket posted the highest confidence level relative to citizens in other age brackets during the covered quarter.

Also, households with an income of USD 2,500 or more per month continued to be more confident than those earning less. Moreover, students were more optimistic than private sector employees, the self-employed, housewives, public sector employees and the unemployed in the second quarter.

In addition, consumers in Mount Lebanon posted the highest confidence level across administrative districts or mohafaza, followed by consumers in the North, Beirut, the South and the Bekaa. Further, Christian consumers had a higher level of confidence than Druze, Sunni and Shiite consumers.

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. 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 Byblos Bank Economic Research and Analysis Department has been calculating the Index on a monthly basis since July 2007, with January 2009 as its base month. The Index is based on a face-to-face monthly survey of a nationally representative sample of 1,200 males and females living throughout Lebanon. The monthly field survey is conducted by Statistics Lebanon Ltd, a market research and opinion-polling firm.

Photo Caption: Nassib Ghobril, Chief Economist and Head of the Economic Research and Analysis Department at Byblos Bank Group



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