The sudden resignation of the PM in early November was the main event that affected household sentiment in the fourth quarter of the year.
BEIRUT: The Byblos Bank/AUB Consumer Confidence Index ended the year with a slight uptick. The Index averaged 61.8 in the fourth quarter of 2017, an increase of 5.9 percent from a 58.4 average for the third quarter of the year. In addition, the Byblos Bank/AUB Present Situation Index averaged 60 in the fourth quarter of 2017 and improved by 6.2 percent from the preceding quarter, while the Byblos Bank/AUB Expectations Index averaged 63.1 and grew by 5.7 percent from the third quarter of 2017.
Historical comparisons, however, point that the economy has a great deal of recovering to undergo in order to hit earlier confidence numbers
The average score of the Index in the fourth quarter of 2017 was 41.6 percent lower than the quarterly peak score of 105.8 registered in the fourth quarter of 2008, and remained 36 percent below the annual peak score of 96.7 reached in year total 2009.
Nassib Ghobril, Byblos Chief Economist, noted, “the sudden resignation of Prime Minister Saad Hariri in early November was the main event that affected household sentiment in the fourth quarter of the year,” adding, “the shock resignation triggered a political crisis that reverberated across Lebanon, as a massive flow of rumors about the circumstances and consequences of the resignation had a negative impact on the sentiment in the first three weeks of the month and risked a significant slide in the Index.”
Ghobril pointed further that the resolution of the crisis towards the end of November 2017, as well as Lebanon’s renewed commitment to the “dissociation policy” from regional conflicts, eased the political crisis and economic uncertainties that prevailed during most the month.
As such, the Present Situation Index increased by nearly 13 percent and the Expectations Index improved by 10 percent in November, the highest increase for both indices since last June. He noted: “given that the Byblos Bank/AUB Consumer Confidence Index’s survey takes place at the end of each month, the November results captured the sentiment registered during the resolution of the crisis, rather than at the height of the rumors and uncertainties.”
Further, Ghobril indicated that, ”consumer confidence in Lebanon has proven historically to be very sensitive to political and security developments, whether they are positive or negative. This trend was evident in the covered quarter, as the withdrawal of Prime Minister Hariri’s resignation and the resumption of the proper functioning of the government were the key factors for the improvement in household sentiment during the fourth quarter of 2017.”
But despite the resolution of the political crisis, the results of the Index’s survey continued to reflect the prevailing skepticism of Lebanese households, as only 11.1 percent of the Lebanese polled in the fourth quarter of 2017 expected their financial condition to improve in the coming six months, while 62.9 percent of respondents believed that their financial situation will deteriorate and 23.1 percent forecast their financial condition to remain the same over the covered period of time.
In addition, 9 percent of the Lebanese surveyed in December 2017 expected business conditions in Lebanon to improve in the coming six months, while 67.3 percent of respondents anticipated business conditions to deteriorate, relative to 67.5 percent in October and 67.2 percent in November 2017.
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. 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.
The Index is based on a face-to-face monthly survey of a nationally representative sample of 1,200 men and women living throughout Lebanon.