Lebanon Businessnews News

Household spending
expected to rise next year
Growth to be driven by remittances

and cash transfers to the vulnerable

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Household spending is expected to grow by three percent in 2023 to $31.6 billion, compared to a growth of 1.2 percent recorded in 2022, according to the ‘Lebanon 2023 Consumer Outlook’ report recently released by Fitch Solutions. Household spending is forecasted to grow at an annual average of 2.8 percent over the period 2022-2026.

The improvement is attributed to the introduction of cash transfers to vulnerable households and solid remittance inflows as more citizens are moving abroad to escape the worsening economic and social conditions. The household spending figures for 2023 “will be amplified by the extraordinary levels of inflation that has been present since 2020,” according to the report titled ‘Soaring Inflation and Fragile Political Climate Hamper Full Spending Recovery’. Household spending recorded significant contractions of an estimated 12 percent in 2021 and of almost 50 percent in 2020.

Inflationary pressures began to shift into services such as tourism in the second half of 2022 and will continue into 2023. “Rising consumer price inflation has been the key risk to consumer spending over 2022, and it has been eroding purchasing power and shifting consumer spending away from discretionary spending,” the report said. Inflationary pressures have worsened with the Russia-Ukraine conflict which has significantly impacted global prices of key commodities, such as oil and gas, fertilizers, wheat, and corn.

Fitch Solutions’ consumer spending projections for 2023 are in line with its forecast that the economy will grow by 3.7 percent in 2023, after a decline of 9.3 percent in 2021 and a contraction of 26 percent in 2020. “While this will be the second consecutive year since 2018 that the Lebanese economy will be in positive territory, we highlight that growth will be fragile. Slow growth will be the result of high consumer price inflation as well as weak domestic political conditions and a challenging operating environment, all of which will further discourage investment, weighing on employment opportunities,” the company said.
Date Posted: Nov 08, 2022
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