Consumption down in Q3

BTA-Fransabank index: retail slowdown curbs growth

Retail activity reported a significant drop during the third quarter of 2012, according to the new retail index prepared by the Beirut Traders Association (BTA) and Fransabank.

Nicolas Chammas, chairman of the BTA, said that retail trade activity has not only stagnated, but has also started to reflect a recessionary trend since the beginning of the year. The continued slowdown during October and November suggests that the trend will continue through the end of the year, he said: “The commercial sector’s performance will score a drop of at least ten percent in 2012, if the current situation lingers.”

The index showed that commercial activity rose by two percent compared to the same quarter of 2011. But taking into consideration the inflation rate (10.3 percent), would mean that the activity has actually dropped by 8.5 percent.


“Local and regional instability, travel bans for Gulf nationals, and bickering over the salary scale for public sector employees have all weighed down retail activity,” said Chammas.

Consumers displayed sharp restraint in spending on vital trade sectors. Spending fell by 6.6 percent on food and by 17 percent on alcoholic drinks. Spending on clothing dropped by 20 percent while spending on education fell by 18 percent. Consumption of durable goods posted sharper decreases with 38 percent drops in furniture sales and a 19 percent drop in home appliances and electronics sales.

Chammas said traders are relying on the upcoming holidays season to make up for part of their losses: “Improved activity should go across all the commercial sectors in order to leverage the plummeting sales reported through most of the year.”

Commercial sectors are a vital component of the economy, as they represent almost one third of the annual GDP. “Growth in 2012 may not register a modest one to two percent increase, as initially predicted, but it should, at best, stay flat with last year,” Chammas said.