Lebanon’s private sector economy woes continue

Lebanon’s private sector economy continued to struggle in September, with the sharpest deterioration in business conditions since June, weighed down by political and economic turmoil that has affected the country credit ratings.

The Blom Purchasing Managers’ Index, a gauge designed to give an overview of the health of the country’s private sector economy, recorded a headline rate of 46.4 last month from 47.8 in August, staying well below the 50mark that separates contraction from growth.

A key factor behind the faster decline in operating conditions was an accelerated contraction in overall output in September, with many survey participants, citing political instability when explaining lower business activity.

New orders placed with private sector companies in Lebanon also continued to decrease at the start of the third quarter. The rate of deterioration accelerated from August to reach the strongest since June. The decline was in part driven by another reduction in new export business, the survey noted.

International sales have now fallen in each month since August 2015. The rate of decline accelerated to the fastest in six months.

“Despite the renewed political willpower to reform and the plan to drive GCC investments into the country’s infrastructure, reports by Fitch Ratings among others this month downgraded Lebanon to CCC from B-, which also reflects the new rating of Lebanese banks,” said Rouba Chbeir, a senior economist at Bliminvest Bank, said. “As a result, economic growth faltered in the first nine months of the year.”