Lebanon’s consumer confidence soars, as rest of region feels effects of credit crunch, latest Bayt.com and YouGovSiraj figures reveal
December 29, 2008
Consumer expectations and propensity to spend indices also shoot up
Consumer confidence in Lebanon has leaped 25.5 index points, despite the effects of the credit crunch being felt by residents around the rest of the Middle East, according to recent research conducted by the Middle East’s number one job site Bayt.com, in conjunction with research specialists YouGovSiraj. This massive growth in consumer confidence comes amidst a backdrop of waning consumer confidence levels around the Middle East region throughout the year.
The picture around the Gulf region was mixed. Qatar improved by 1.2 points while Saudi Arabia registered no change. By contrast, Kuwait, Oman and the UAE all recorded drops in their consumer confidence indices, falling by 3.3, 3.4 and 3.4 points respectively.
Interestingly, other countries in the Levant also saw a marked improvement, with Jordan moving up its index by 21.2 points and Syria by 5.1 points. Residents in North Africa were also relatively confident with Egypt, Morocco and Tunisia each moving up between 7 and 8 index points with the marked exception of Algeria which moved down by 4.3 index points - the hardest hit amongst the countries surveyed.
The Consumer Confidence Index (CCI) is a measure of consumer expectations and satisfaction of various elements of the economy including inflation, job opportunities and the cost of living.
“Times of economic instability have a marked effect on residents in a particular country, and it is very important to find out how people are really feeling about the current business and economic climate by gauging their opinions,” explained Bayt.com’s Regional Manager, Amer Zureikat. “Surveys such as the Consumer Confidence Index - conducted on a periodical basis - are a very effective tool for comparing the current attitudes of people and how they have changed over a particular time period. As HR professionals and for industry stakeholders, it offers a valuable and sound insight for us to understand how consumers are thinking and therefore afford us the opportunity to use these insights for adapting our strategies to the current market’s needs.”
One measure of the CCI assesses how respondents feel that their financial position has changed in terms of whether they are better or worse off this year compared to the last. Overall, respondents in the November survey did not reach a consensus over whether their financial position was better or worse(30% each), narrowly eclipsed at 34% by those who felt their position was the same. KSA, Morocco, Jordan, and Syria were the only countries where the majority felt they were worse off, whilst Qatar respondents felt the most positive with 39% feeling they were better off.
Another measure of consumer confidence addresses consumer expectations and their level of optimism towards the future. Once again Lebanon and Jordan led the field in terms of positive consumer expectations, moving up the index by a phenomenal 21.4 points each. Significantly, most countries remained relatively positive: Bahrain moved up the index by 3.3 index points since the previous quarter, whilst amongst the GCC countries, Oman’s consumer expectations showed the most optimism, moving up the index by 4.4 points. Qatar and KSA also moved up by 3.4 and by 2.7 index points respectively.
Respondent’s optimism for the future in terms of their country’s economy remained similar compared to the last wave, with 34% of respondents believing that the economy would be better in a year’s time, compared to 32% from July. In comparison, only 28% in this wave believed it would be worse. Similarly, like the last wave, optimism remained positive in terms of how people thought their financial positions would change in a year’s time, with 45% feeling they would be better off and just 9% believing the situation would be worse. Qatar was the most optimistic country in this regard, with 54% believing it would be better compared to just 38% of Morocco’s residents. Lebanon also remained highly positive, with 49% believing their financial position would be better.
Of the surveyed countries, the Levant countries of Lebanon, Syria and Jordan again showed improvements from the previous wave in terms of propensity to spend, most notably in Lebanon which moved up 19.8 points. Bahrain, followed by Oman, recorded the greatest decreases in the index, dropping 18.3 and 17.6 points. Qatar fared little better, dropping by 8.1 points. The data suggests a continuing wave of economic stability in Lebanon and the Levant countries.
Addressing respondent’s feelings on whether they thought it was a good, neutral or bad time for buying consumer goods is a good indication of attitudes towards financial stability. Since May, a fall was observed with the majority of respondents believing it to be a bad time to buy durables (44% of respondents).
“Although the indicator will not predict economic performance, it does provide a very insightful look into how consumers are truly feeling. The fact that the numbers have dropped in terms of willingness to spend suggests that consumers are exercising caution during this period of instability. This data will help marketers and other companies to sell their products during this time, as those brands that offer excellent value to consumers when they need it most, will be winners during these challenging times,” said Nassim Ghrayeb, CEO, YouGovSiraj.
Employee confidence in the local job market and their attitudes towards their work form an important part of the CCI, with employee confidence in Lebanon again improving, by 6.1 index points. Jordan, Syria and all of the North African countries improved. The most significant drop however occurred in the UAE, which moved down 12.0 index points, but recorded drops in the majority of the Gulf countries including Oman, which fell 7.9 points, Qatar 5.2 index points, Saudi Arabia 4.0 points and Kuwait 3.7 points. The data suggests that Gulf residents are feeling concerned about the job market, perhaps as news of job losses and salary cutbacks are currently a daily feature in the region’s media.
Interestingly, Lebanon’s respondents didn’t believe it was a good time to do business, just 26% of people believed it was, compared to the more optimistic levels in Oman and Algeria – with 32% and 30% each.
“At a time when the whole world seems to be suffering from an economic slowdown, this type of research is useful in terms of revealing whether people think their salary is keeping pace with the changing economic climate and the changing cost of living. The numbers dropped slightly, with 62% feeling that salaries across the region haven’t increased with rising living costs. In Lebanon, the numbers believing their salary hadn’t kept pace with the cost of living was an overwhelming 71%, which shows that whilst other conditions may be good, residents believe remuneration should be higher,” explained Zureikat.
Job availability will become worse in a year’s time with 31% of all respondents believing availability will be scarce. Lebanon drew with the average, with 28% believing availability would be better. Qatar and Oman however were more positive, with 40% and 38% believing that more jobs would be available, in a sign perhaps that these countries so far have not been greatly affected by the credit crunch. 32% of respondents in Bahrain believed more jobs would be available while least positive was Egypt at 20% In the UAE, an overwhelming 40% believe that the availability of employment will be much worse. The UAE shared its lack of optimism with Egypt where 38% believe there are tough times ahead when it comes to getting jobs in the next year.
“The Consumer Confidence Index and other surveys are a great pointer towards how people are really feeling about the current economic situation. This is particularly interesting when regional economic stability seems to be at risk from events around the globe, with the effects really felt by consumers, employers and employees. HR stakeholders, professionals and other organisations can use this excellent, insightful data to reveal and understand what new strategies need to be designed and what changes can be made – whether in their individual organisations or nationwide - to convert these challenging times into successful ones,” concluded Nassim.
Data for the October/November 2008 Consumer Confidence Index Survey was collected online between the period of 27th October and 24th November 2008 with 13,733 respondents from across the UAE, KSA, Qatar, Oman, Kuwait, Bahrain, Syria, Jordan, Lebanon, Egypt, Morocco, Tunisia and Algeria. Males and females aged between 20 and 62, of all nationalities, were included in the survey.
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