• Consumer confidence drops to lowest level on record


• Deteriorating socioeconomic conditions and the government’s inability to address the crisis weigh on household sentiment and outlook   

The results show that the Index averaged 19 points in the second quarter of 2020, constituting a decrease of 51% from 38.7 points in the first quarter of 2020 and a drop of 73% from 70.9 points in the second quarter of 2019. The Index registered a record low of 20.1 points in April 2020 and further dropped to a new all-time low of 15.4 points in May, before it slightly recovered to 21.6 points in June.

Further, the Byblos Bank/AUB Present Situation Index averaged 18.9 points in the second quarter of 2020 and retreated by 43.1% from the preceding quarter, while the Byblos Bank/AUB Expectations Index averaged 19.2 points and regressed by 54.8% from the first quarter of 2020. The two sub-indices reached their lowest levels since the start of the Index's inception.

In addition, the average monthly score of the Index in the second quarter of 2020 was 82% lower than the quarterly peak score of 105.8 points registered in the fourth quarter of 2008, and remained 80.3% below the annual peak of 96.7 points reached in full year 2009. The second-quarter results constitute their lowest level in 52 quarters.

Commenting on the results, Mr. Nassib Ghobril, Chief Economist and Head of Economic Research and Analysis at the Byblos Bank Group stated, ''the collapse in household sentiment was due to the government's limited action to tackle the economic and financial crisis that was exacerbated by the coronavirus pandemic.” He added, “the Lebanese pound's exchange rate in the parallel market significantly weakened in the second quarter of 2020, which, along with the substantial surge of consumer prices and the government's inability to contain the hikes, reduced the purchasing power of households and negatively affected sentiment.” He noted, “the shutdown of the economy due to the coronavirus pandemic led several companies to cut salaries or, in some cases, to lay off some of their employees, which further reduced households' income and increased the level of uncertainties for households.'' 

Mr. Ghobril indicated that “the rapid deterioration in socioeconomic conditions took a heavy toll on household sentiment, as only 0.6% of Lebanese polled in June 2020 considered that their personal financial conditions improved from six months earlier, while 85.5% of respondents said that their financial situation deteriorated from December 2019. In addition, only 0.1% of the Lebanese surveyed in June 2020 considered that economic conditions in Lebanon improved from six months earlier, while 91.1% indicated that economic conditions deteriorated from December 2019.”

Further, the detailed results of the Index's monthly survey reflect the prevailing frustrations of Lebanese households about the absence of measures to improve conditions in the country. Specifically, only 0.3% of the Lebanese polled in June believed that their personal financial conditions would improve in the coming six months, while 85.6% of households considered that their financial conditions will deteriorate by December 2020. In addition, 0.8% of respondents anticipated economic conditions to improve in the coming six months, while 90.3% of respondents expected business conditions to deteriorate by December 2020. 

The results of the Byblos Bank/AUB Consumer Confidence Index for the second quarter of 2020 show that female consumers had a higher level of confidence than their male counterparts, and consumers in the 50 to 59 year-old bracket posted the highest confidence level relative to citizens in other age brackets during the covered quarter. Further, households with an income of USD 2,500 or more per month continued to be more confident than those who earn a lower income. Moreover, housewives were more optimistic than public-sector employees, the self-employed, the unemployed and private-sector employees during the second quarter of 2020, while students were the most optimistic segment overall.

In addition, the confidence level of residents in the North decreased by 65.3% in the second quarter of 2020 from the first quarter of 2020, followed by households in the Bekaa region (-50.3%), the South (-49.7%), Mount Lebanon (-46.9%), and Beirut (-45%). The sentiment of residents in Beirut was the highest among all geographic regions during the second quarter of 2020, followed by households in the Bekaa, Mount Lebanon, the South and the North. Also, the confidence level of Shiite households dropped by 59.5% quarteronquarter in the second quarter of 2020, followed by the sentiment of Sunni households (-51.8%), Christian households (-47.3%) and Druze households (-32.7%). Christian households registered the highest level of confidence in the second quarter of 2020, followed by Druze, Sunni and Shiite households.

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 by age, gender, income, profession, geographical region, and religious affiliation. The Byblos Bank Economic Research and Analysis Team 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, but the April and May 2020 surveys were conducted through computer-aided telephone interviews due to the coronavirus outbreak. The monthly field survey is conducted by Statistics Lebanon Ltd, a market research and opinion-polling firm.