The diagnosis for the third quarter of 2021 is the same as for the second. “The deterioration of economic activity has accelerated,” announced the Beirut Traders Association (ACB), as well as Fransabank in its quarterly report on the Lebanese commercial sector. An acceleration therefore continues, causing the index of real retail sales to 4.42 points for the quarter from July to September 2021. Calculated by removing the effect of price increases, this index measures sales real retail, all sectors combined, on a basis of 100 measured in the last quarter of 2011. A total which marks a decline as much in annual rate (5.52 points) than quarterly (4.89 points), and a record since the setting in place of this index.
For the authors of the report, the main reason behind this deterioration is simple: the lifting of the fuel subsidy mechanisms that the Banque du Liban had established in the fall of 2019, at the start of the economic and financial crisis that the country is going through. Since last summer, these mechanisms have been gradually lifted until their almost complete cancellation in October. A gradual lifting that had led to shortages and caused very long queues at service stations throughout the territory, as well as the closures of the latter, reducing the trips of motorists and further widening their purchasing power, so that nearly 74% of residents in Lebanon were living below the poverty line at the time, according to an Escwa report.
A chaotic situation in the middle of the summer season, in addition to the electricity shortages, which has also dissuaded many foreign tourists and Lebanese expatriates from coming to the country for vacations, and consequently considerably reduced the contribution and the expenses of foreign exchange to stimulate national economic activity. To this distressing picture was added political instability, while the leaders stalled on many issues, in particular that of the formation of a government which could have given a semblance of stability to Lebanon and which would ultimately only be appointed. September 10, at the end of this season.
All this against the backdrop of a depreciation of the national currency against the dollar, starting in July and ending September at 17,000 pounds to the dollar on the parallel market, and a massive emigration, in particular of the youth, with 77% considering his departure and / or actively working there, according to a study by the American University of Beirut published in September. Finally, the decline in the currency in circulation is also one of the factors automatically reducing the ability of citizens to spend and businesses to achieve their turnover. The M1 aggregate (banknotes, coins and accounts in sight books) thus rose from 32 251 billion dollars in the summer of 2020 (end of September) to 53 323 billion last summer, an increase of 63.3% year-on-year.
Almost 100% drop
In detail, the ACB / Fransabank index weights the results of a sample of companies representing all retail sectors according to the inflation rate calculated by the Central Statistics Administration (ACS). Almost all sectors have noted a “100% drop in their retail index year on year,” write the authors of the report.
On a quarterly basis, the golden palm of the decline in real turnover went to pharmaceutical products (-89.72%), followed by new cars (-89.03%), supermarkets (-84.38 %), bakeries (-77.62%), restaurants (-61.61%) and shopping centers (-13.14%). As for medical equipment and optical instruments, the index however notes considerable increases of 90.62% and 89.96% respectively. The real turnover of fuels has increased by 3.33%, on the sidelines of this gradual lifting of subsidies and its consequences.
The diagnosis for the third quarter of 2021 is the same as for the second. “The deterioration of economic activity has accelerated,” announced the Beirut Traders Association (ACB), as well as Fransabank in its quarterly report on the Lebanese commercial sector. An acceleration continues therefore, leading to the index of the figure …
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ACB: the deterioration in economic activity picked up speed in Q3