BEIRUT: The confidence of Lebanese consumers plunged further this year as the political standoff wreaked more damage to the economy, a new survey showed Wednesday. According to The Byblos Bank/AUB Consumer Confidence Index, the decline came in January, February, May and June, while confidence improved relatively in March and April 2013.
In February, the index reached its second-lowest point on a monthly basis since its inception in July 2007, the report added.
On a quarterly basis, it said, the index regressed in the first quarter and slightly improved in the second quarter of the year, while it posted its second- and third-lowest outcomes ever at 28.8 and 30.1 in the first and second quarters of the year, respectively.
The Byblos Bank/AUB Consumer Confidence Index is a measure of the sentiment and expectations of Lebanese consumers with respect to the economy and their own financial standing, in line with leading consumer confidence indices worldwide.
Nassib Ghobril, Chief Economist and Head of the Economic Research and Analysis Department at the Byblos Bank Group, believes that this drop in the consumer confidence index was due to the volatile domestic political situation, repeated security breaches, direct and indirect spillovers from the Syrian conflict and institutional paralysis in the country.
He noted that the resignation of caretaker Prime Minister Najib Mikati’s Cabinet, the near-unanimous designation of Tammam Salam as the new prime minister and hopes for a quick formation of a new functional Cabinet boosted consumer sentiment, but only for a limited period of time.
Analysis of the results revealed that the near-term expectations of consumers were generally at the same level or lower than that of current conditions during the first half of 2013, the report said. This deepens an ongoing trend that started in the first half of 2012, and differs from previous years when consumers’ near-term expectations were consistently higher than perceptions of their current conditions, it added. In turn, this reflects consumers’ negative outlook and raises concerns over the depth of their pessimism.
“Consumer confidence has proven to be very sensitive to chronic security deterioration and heightened political uncertainties, which, in turn, has a direct impact on economic activity,” Ghobril said.
Ghobril projected economic activity would remain stagnant in the near future due to consumers’ declining expectations for near-term conditions in the absence of significant or lasting measures to improve confidence level.
“Consumer sentiment remained at such low levels in the first half of 2013 that consumers require a positive political shock of the magnitude of the Doha Accord and not just a change in government in order to restore their confidence to the levels of 2008, 2009 and even 2010,” he added.