Lebanese business conditions in 2021 and the near future won’t be any better than last year when thousands of jobs went to the wall, according to a senior economist.
The latest BLOM Lebanon Purchasing Managers’ Index (PMI) reading of 43.2 in December up from 42.4 in November pointed to a softer deterioration in Lebanese business conditions although the rate of decline was still sharper than the historical average.
The monthly survey of business conditions in the Lebanese private sector, compiled by IHS Markit, revealed that the latest downturn in operating conditions was partly driven by a further contraction in output.
Demand remained severely subdued due to the ongoing political and economic crisis in the country. However, the latest reduction in activity was the softest since July.
New orders received by private sector companies continued to decline in the final month of 2020, extending the current contraction sequence which began in June 2013.
Overall demand received little support from international markets, with new export orders falling further in December. Some panelists commented that regional instability had weighed on foreign sales.
Lebanese businesses continued to cut staff numbers at the end of the fourth quarter with the rate accelerating to the quickest since July.
Dr Ali Boblol, chief economist and head of research at BLOM Bank told Arabian Business: “The Lebanese economy finished 2020 worse than it had started it… this implies that business conditions for the private sector have declined at an accelerating pace in 2020. So has private sector employment, an index that points to further emigration and brain drain from Lebanon.”
He expected that the current year and the near future won’t be better as the economic crisis, Covid-19, and regional instability continue to rage.
“Perhaps putting an end to the senseless political deadlock over the formation of a functioning government will turn things around, as the country can’t afford the luxury of losing more and more time,” he said.
According to the latest business survey, cost burdens continued to rise at a solid pace, despite a softening in the rate of inflation from November. Underlying data revealed that the latest increase was predominantly driven by higher purchase prices, while staff costs continued to fall, although each at a softer pace
Private sector firms in Lebanon remained pessimistic about the 12-month business outlook in December. Moreover, the degree of negativity was more severe than any recorded prior to the Covid-19 crisis.
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