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New orders and higher output helped Lebanon's private sector post the slowest decline in activity in recent months, a new survey has shown.
The Blom Lebanon Purchasing Managers’ Index (PMI) had a reading of 49.7 in March, up from 48.8 in February.
Although the index remained in sub-50.0 contraction territory in January and declines persisted, the rates of decrease were marginal and the softest for seven months.
“Much has been said about Lebanon’s economic and humanitarian crisis, driven by on-going political paralysis and government’s deliberate inaction. Nevertheless, despite these enormous challenges, the country’s private sector has managed to cope and seems to be stabilizing," said Stephanie Aoun, research analyst at Blominvest Bank.
The private sector firms have erred on the side of caution and more economic sectors are becoming dollarized and cash based, she added.
Amid reports of exchange rate volatility, the latest survey data showed historically elevated rates of inflation across both input costs and output prices. Supplier delivery times also increased as vendors reportedly delayed shipments, the report noted.
Meanwhile, the survey data showed stable employment levels at the end of the first quarter. There was also a marginal uplift in stocks of purchases as firms experienced spare capacity. As a result, private sector companies across Lebanon continued to work through their backlogs in March. The rate of depletion was the slowest since October last year, however.
Despite the slight improvement in activity, Lebanese firms were mainly pessimistic about the 12-month outlook for their businesses.
Lebanon is in the grip of what the Word Bank called the worst economic and humanitarian crisis of the past 150 years. The meltdown which began in 2019, has caused hyperinflation to hit 170% in 2022 compared with the same month a year earlier. Lebanon’s currency, once valued at 1,500 to the dollar has since lost over 90% of its value since 2019.
(Reporting by Brinda Darasha; editing by Seban Scaria)
