Byblos Bank/AUB Consumer Confidence Index: Consumer Confidence retreats in First Quarter of 2020

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Byblos Bank/AUB Consumer Confidence Index: Consumer Confidence retreats in First Quarter of 2020

  • Consumer confidence drops to lowest level in 14 quarters
  • Mounting socioeconomic pressures, haircut on deposits take toll on household sentiment and outlook   

 

Byblos Bank Headquarters, May 19, 2020: Byblos Bank issued today the results of the Byblos Bank/AUB Consumer Confidence Index for the first quarter of 2020.

The results show that the Index averaged 38.7 points in the first quarter of 2020, constituting a decrease of 19.1% from 47.8 points in the fourth quarter of 2019 and a drop of 49% from 75.5 points in the first quarter of 2019. Most of the decrease in the Index in the first quarter of the year was driven by the March reading of the Index, which registered a decline of 34.2% from the preceding month and a drop of 62.3% from the same month of 2019. Also, the Index decreased by 39% annually in January and by 44.2% in February 2020. 


Further, the Byblos Bank/AUB Present Situation Index averaged 33.2 points in the first quarter of 2020 and decreased by 17.7% from the preceding quarter, while the Byblos Bank/AUB Expectations Index averaged 42.4 points and regressed by 20% from the fourth quarter of 2019. In addition, the average monthly score of the Index in the first quarter of 2020 was 63.4% lower than the quarterly peak score of 105.8 points registered in the fourth quarter of 2008, and remained 60% below the annual peak of 96.7 points reached in full year 2009. The first-quarter results constitute the 18th lowest level in 51 quarters.

 

Commenting on the results, Mr. Nassib Ghobril, Chief Economist and Head of Economic Research and Analysis at the Byblos Bank Group stated: ''The first-quarter results show a  plunge in the Index to its lowest level since the fourth quarter of 2016, with the March result registering its lowest level since December 2013. The downward trend in sentiment is due to mounting socioeconomic uncertainties for households amid the dim economic outlook. In addition, the substantial increase in consumer prices and the government's inability to contain the hikes further weighed negatively on confidence. Moreover, the government's emerging intention to implement a haircut on deposits shook the confidence of depositors and contributed to the steep drop of the Index in March.''

 

The detailed results of the Index's monthly survey reflect the prevailing frustrations of Lebanese households and the weakening of their expectations, as only 0.3% of Lebanese polled in March 2020 considered that their personal financial conditions improved from six months earlier, while 78.2% of respondents said that their financial situation deteriorated from September 2019. Further, 0.2% of the Lebanese polled in March believed that their personal financial conditions would improve in the coming six months, while 81.4% of households considered that their financial conditions will deteriorate by September 2020. In parallel, none of the Lebanese surveyed in March 2020 considered that economic conditions in Lebanon improved from six months earlier, while 89.3% indicated that economic conditions deteriorated from September 2019. In addition, 1.2% anticipated economic conditions to improve in the coming six months, while 86.4% of respondents expected business conditions to deteriorate by September 2020.     

 

The results of the Byblos Bank/AUB Consumer Confidence Index for the first quarter of 2020 show that female consumers had a higher level of confidence than their male counterparts, and consumers in the 21-to-29 year-old age 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, the self-employed were more optimistic than housewives, public-sector employees, the unemployed and private-sector employees during the first quarter of 2020, while students were the most optimistic segment overall.

 

In addition, the confidence level of residents in Beirut increased by 7.4% in the first quarter of 2020 from the fourth quarter of 2019; while the sentiment of households in the North regressed by 27.7% from the preceding quarter, followed by households in the Bekaa region and the South (-25.2% each), and Mount Lebanon (-18.6%). The sentiment of residents in Beirut was the highest among all geographic regions during the first quarter of 2020, followed by households in the Bekaa, Mount Lebanon, the North and the South. Also, the confidence level of Druze households dropped by 42.5% quarter-on-quarter in the first quarter of 2020, followed by the sentiment of Christian households (-20.5%), Shiite households (-14.5%) and Sunni households (-13.6%). Shiite households registered the highest level of confidence in the first quarter of 2020, followed by Sunni, Christian and Druze 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 March survey was 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.