The results of the Byblos Bank/AUB Consumer Confidence Index for the fourth quarter of 2018 show that the Index regressed by 0.9% in October from the preceding month, declined by 0.8% in November and increased by 5.3% in December 2018. The Index averaged 75.5 in the fourth quarter of 2018 and was nearly unchanged from 75.3 in the third quarter of the year. In addition, the Byblos Bank/AUB Present Situation Index averaged 66.7 in the fourth quarter of 2018 and increased by 1.1% from the preceding quarter, while the Byblos Bank/AUB Expectations Index averaged 81.4 and was nearly unchanged from the third quarter of 2018. Further, the average monthly score of the Index in the fourth quarter of 2018 was 28.6% lower than the quarterly peak of 105.8 registered in the fourth quarter of 2008, and remained 22% below the annual peak of 96.7 reached in full year 2009. 

The stagnation in household sentiment during the fourth quarter of 2018 reflects the ongoing political impasse that has prevented the formation of a new government in Lebanon more than seven months after the May 2018 parliamentary elections. However, the flood of rumors and scare tactics since the summer about the impending collapse of the Lebanese economy and of the national currency did not succeed in triggering broad panic among citizens. In fact, the momentum in confidence evaporated soon after the elections, but the Index held steady during the third and fourth quarters, instead of dropping materially during this period.

The fourth-quarter results show that 9.6% of the Lebanese polled in the fourth quarter of 2018 expected their financial conditions to improve in the coming six months, down from 11.5% in the third quarter of the year. In parallel, 57.9% of respondents in the covered quarter believed that their financial situation will deteriorate, nearly unchanged from 58.1% in the previous quarter, while 29.8% forecast their financial condition to remain the same in the next six months compared to 28.2% in the third quarter of 2018. In addition, 9.6% of the Lebanese surveyed in December 2018 expected business conditions in Lebanon to improve in the coming six months compared to 10% in September 2018, while 65.8% of respondents anticipated business conditions to deteriorate, relative to 67.4% in September.

INSEAD's Global Talent Competitiveness Index (GTCI) for 2019 ranked Lebanon in 59th place among 125 countries around the world and in seventh place among 13 countries in the Arab region. Lebanon also came in 11th place among 32 upper middle-income countries (UMICs) included in the 2019 survey. Based on the same set of countries included in the 2018 and 2019 surveys, Lebanon's global rank was unchanged year-on-year.

The GTCI measures a country's ability to attract, develop and retain talent. It assesses the steps and decisions that countries take to develop and acquire talented individuals, as well as a country's ability to provide the set of skills required to have a productive, innovative and competitive economy. A country's score is the simple average of its scores on the six pillars, with a higher score reflecting a better performance in terms of talent competitiveness. 

Globally, the talent level in Lebanon is more competitive than its counterparts in Argentina, Armenia and Botswana, and is less competitive than talent in Kazakhstan, Jordan and the Philippines among economies with a GDP of $10bn or more. Lebanon ranked ahead of Armenia, Botswana and Colombia, and came behind Bulgaria, Kazakhstan and Jordan among UMICs; while it came ahead of Kuwait and behind Jordan in the Arab region. Lebanon received a score of 40.85 points compared to 41.91 points in the 2018 survey. Lebanon's score was lower than the global average score of 43.44 points, but it was higher than the UMIC's average score of 38.9 points and the Arab region's average score of 40.3 points. Also, Lebanon's score was lower than the Gulf Cooperation Council's (GCC) average score of 51.1 points, but was higher than the non-GCC countries' average score of 31.1 points.

Global Investment Bank Morgan Stanley indicated that the Lebanese sovereign has ample foreign currency reserves to meet its near-term foreign currency financing requirements, and is willing to service its foreign currency denominated debt. It added that a credit event in the near term is not part of its baseline scenario for Lebanon due to multiple reasons. First, it said that domestic banks held $16.1bn worth of Lebanese Eurobonds as at the end of November, compared to their aggregate equity position of $20.2bn. In this context, it pointed out that it is not in the interest of the government to re-profile its Eurobonds, given the banks' large holdings of this instrument. It considered that the Lebanese government can refinance its domestic debt without affecting the banks' capital position. Second, it noted that Banque du Liban's assets in foreign currency stand at $39.7bn, which, in the absence of significant deposit outflows, are sufficient to service the current account deficit estimated at $13.2bn and foreign currency debt redemptions of $2.9bn in 2019. Third, it considered that the Minister of Finance's statements about fiscal challenges in the country are directed towards local political parties and aim to put pressure for the formation of a new government. It added that the current caretaker government has limited decision-making powers and that any key decision about Lebanon's debt profile would have to wait until the formation of a new government. Overall, it considered that the main pressure on Lebanon's ability to service its debt under a "tail-risk scenario" would come from deposit outflows. But it did not expect such a scenario to materialize in the near term, given continued deposit inflows, including an estimated rise in resident deposits of $880m in December, and the lengthening in the average maturity of deposits.