BEIRUT: The Byblos Bank-OSB Consumer Confidence Index showed Lebanese consumers’ confidence levels at their lowest during the first nine months of 2011, owing chiefly to political divisions over the Special Tribunal for Lebanon and the ongoing political crisis in neighboring Syria. The index, a joint project between Byblos Bank and Olayan School of Business at the American University of Beirut, was launched Thursday at the bank’s headquarters in Beirut.

The study, covering the period between 2007 and 2011, said consumer confidence levels have been extremely sensitive to political and security developments in the country.

The Lebanese economy has long been subject to the influence of politics and security, but the study is the first-of-its-kind to methodically correlate an economic indicator to the country’s turbulent political landscape.

“The results of our Index show that consumer confidence in Lebanon is significantly affected by political events, whether they are negative or positive,” Nassib Ghobril, chief economist at Byblos Bank, said at the project’s launching event.

Consumer Confidence Index is an economic indicator measuring consumer views of the current economic situation and their expectations for the future. Customers with high confidence are more likely to spend more, fostering economic activity.

The study showed that 2009 saw the highest yearly average of consumer confidence at 96.7 points propelled by the formation of the long-awaited Cabinet of former Prime Minister Saad Hariri, which at the time brought an end to a months-long political crisis.

The year 2009 saw relative stability bolstering consumers’ confidence said panelists at the launching event.

The index reached its peak in May 2008 at around 133.6 points after rival Lebanese political parties ratified the Doha Accord that ended bloody clashes between pro-government and opposition gunmen after the Cabinet decided to dismantle Hezbollah’s telecommunication network.

Philippe Zgheib, assistant professor at AUB, said “the Doha Accord had the biggest positive impact on [consumer]confidence between July 2007 and September 2011.

“Other political events that affected confidence materially include the parliamentary elections of 2009, the formation of the [former PM Fouad] Siniora and Hariri Cabinets in 2008 and 2009 respectively, the designation of Mr. Najib Mikati as Prime Minister in January 2011, and the formation of the Mikati Cabinet in June 2011.”

The index reached its lowest average value throughout the first nine months of 2011 when it hit an average of 55.3 points. It had reached its lowest point in August at just 46.4 points after the STL issued four arrest warrants and Syria’s political crisis escalated, the study showed.

The index also slid significantly in July and August 2010 under the influence of border clashes between the Lebanese Army and Israeli soldiers in Adaisseh and internal armed clashes in Burj Abi Haidar.

The study was based on 1,200 face-to-face interviews conducted across different Lebanese regions, a statement released by Byblos Bank said. The index is to be issued on a monthly basis. The field surveys are carried out by Statistics Lebanon, a polling firm hired to draw a random sample and conduct the interviews during the last 10 days of every month.

The index’s values are composed of adding-up two sub-indices, a Present Situation Index and an Expectations Index. The first covers the current economic and financial conditions of consumers, and the second addresses their expectations for the upcoming six-month period at the time of the survey.

Additionally, the index classifies consumer confidence data based on region, age, religious affiliation, gender, income and profession.

The average between 2007 and 2011 showed no disparity between consumer confidence across administrative districts (mohafaza); with the exception of the Bekaa, where consumer confidence was significantly lower scoring an overall average of just 56.1, significantly below the national average.

The study also showed Christian and Sunni consumers with identical levels of consumer confidence at around 80 points, while Druze consumers showed lower confidence at 76.3 points. Shiite consumers, however, displayed significant variance scoring a lower confidence level at 67.3.