Economic conditions in Lebanon deteriorated further in September as output and new orders both fell due to political instability and weak demand. Fuel shortages also impacted businesses and supply chains.
The BLOM Lebanon PMI registered 46.9 in September, a marginal increase from 46.6 in August, but still below the neutral 50.0 mark and therefore indicative of economic contraction across the country’s private sector.
Dr. Fadi Osseiran, General Manager of BLOMINVEST Bank, said: "With the economic and financial crisis still plaguing the country and fuel shortages standing in the way, firms were forced to lower input purchases followed by cutting their stock volumes. Although output fell at its softest in three months, firms witnessed liquidity concerns as well as weak purchasing power among domestic clients.”
Input prices also fell for the first time since January 2019 as stagnant employment levels and reports of an improved US dollar exchange rate alleviated inflationary pressures.
Furthermore, political instability within Lebanon reportedly hindered businesses from securing new work from overseas markets. As a result, new export orders fell for a second straight month, according to the survey.
The level of work outstanding fell strongly and to the quickest extent since March 2021, however, employment levels were kept broadly unchanged in September, so firms reported little change in their staff expenses.
For the first time since January 2019, private sector companies reported a month-on-month decrease in overall expenses. However, lower costs did not filter through to selling prices, which increased for a twentieth month running in September, but at a softer pace.
According to the survey, expectations for activity levels over the coming 12 months remained deeply pessimistic. Firms anticipate the challenging political situation to continue and to weigh on business activity.
“However, all this could be turned around – albeit slowly – if the government’s stabilisation and reform plans prove fruitful,” Osseiran said.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
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