Lebanon: People can't afford to save as inflation rockets
Many Lebanese are struggling with personal finances, as inflation rises and the economy struggles
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Over half of Lebanese cannot afford to save money while two thirds face difficulties securing food and other necessities, a Finance Ministry survey showed Monday as inflation figures soared in first nine months of 2012.
“More than 55 percent of Lebanese do not have any monthly income surplus and over 63 percent face difficulties in providing for foodstuff and necessities,” said the report, published in the October newsletter of the Lebanese Institute of Finance.
Economist Marwan Iskandar told The Daily Star the lack of savings has a dire direct impact on the economy.
“This is an indicator that growth will decline even further. The figures are indicative of declining disposable income and purchasing power,” he said.
“The decline in savings directly translates into a decline in investments, which also hinders the economy’s ability to grow,” Iskandar added.
Iskandar also cautioned that the figures indicate that the government’s ability to increase taxation is narrowing. “People are on the brink and cannot at all afford additional taxation,” he said.
Iskandar said that income level in Lebanon remain low despite the wage increase enacted by the government last February.
“Earnings in Lebanon remain very low and prices keep increasing. Moreover, the average citizen pays double utility bills,” Iskandar said.
“The cost of fuel, electricity and telecoms as well as health and education are among the highest in the world,” he added.
Economist Ghazi Wazni echoed Iskandar’s views, highlighting lack of savings as a direct result of soaring inflation rates, unmatched by increases in salaries.
“Around 30 percent of Lebanese earn bellow LL1.2 million ($800), not enough even for basic needs,” he said, arguing that the government should go forward with plans for public sector raises despite the costs to the treasury and furious opposition by private sector groups.
The survey, which also measured knowledge of financial issues across the country, showed that 50 percent of Lebanese citizens do not budget their household income and expenditures.
Around 50 percent of Lebanese, the survey showed, had no exact knowledge of their weekly expenditures. Over 70 percent have no exact knowledge of their weekly income, the report added.
Meanwhile, the Consumer Price Index issued by the Central Administration of Statistics showed that prices soared 10.3 by September 2012 compared to same period last year.
Housing, accounting for a significant 16.2 percent of the index’s weight, skyrocketed, gaining over 44 percent during the first nine months of 2012. Alcoholic beverages and tobacco products came second, gaining over 19 percent in the same period.
While all the sub indices increased, health costs declined 2.1 percent, the report showed. Water, electricity and fuel gained 7.1 percent as education costs rose 7.5 percent, the report added.
The Lebanese economy could see negative growth in 2012 as a result of weaker performance in most indicators, many experts have warned.
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