Household spending to resume fragile growth. First recovery since 2017 driven by remittances, safety net and ration programs

Family spending is projected to get well this yr for the primary time since 2017, in line with the ‘Lebanon Shopper and Retail Report’ of Fitch Options. Actual family spending is predicted to develop by two p.c in 2022 after an estimated contraction of 12 p.c in 2021 and 17.5 p.c in 2020.

“Fragile client spending progress shall be supported by the introduction of a ration card program, the Emergency Social Security Web Challenge, in addition to strong remittance inflows as extra Lebanese transfer overseas as a result of worsening financial and social circumstances within the nation,” mentioned Fitch Options, the analysis arm of Fitch Group which incorporates the worldwide credit standing company Fitch Scores.

Progress in client spending is more likely to stay weak as client worth inflation will edge even increased in 2022. “[Consumer price inflation] is forecast to common 167 p.c, as a result of a sustained depreciation of the foreign money on the parallel market and the elimination of subsidies on important merchandise, each weighing on the spending energy of Lebanese customers,” Fitch Options mentioned.

It mentioned in its ‘Lebanon Ten-12 months Forecast’ issued in November 2021: “With remittances accounting for round 20 p.c of GDP, the Lebanese expatriate group shall be a vital supply of exterior capital and can assist to buoy family spending. We anticipate that the weakening of the foreign money in 2021 will considerably enhance the worth of remittances, rising the diploma to which they may help to spice up customers’ incomes.”

The rise in remittance inflows can also be generated by rising emigration, particularly of residents with a tertiary schooling. “Not solely does the lack of important expertise related to this mind drain weaken the economic system’s progress potential, but it surely highlights a elementary insecurity within the nation’s long-term prospects,” Fitch Options mentioned within the ‘Lebanon Ten-12 months Forecast’.