https://www.thenationalnews.com- A man counts Lebanese pound banknotes at a currency exchange shop in Beirut, Lebanon. Reuters
Output dropped last month as the country continued to grapple with its worst economic crisis
Lebanon’s private sector economy continued to contract in February, but at a softer pace, as weak demand and a sharp fall in output worsened as the country’s economic crisis deteriorated with a further depreciation of its currency amid the coronavirus pandemic and political turmoil.
The BLOM Lebanon PMI index, which measures the strength of the private sector economy, edged up to 42.2 last month, from 41 in January. A reading above the neutral 50 mark indicates economic expansion while one below points to a contraction.
“The Lebanese private sector seems to have gotten a bit of a breather in February 2021,” Ali Bolbol, chief economist and head of research at Blom Bank, said referring to a slight rise in the readings.
“All of output, new orders, and especially new export orders, witnessed declines that were less than before, while employment stabilised.”
Though all were “positive developments” economic risks persist due to “the pessimistic sentiments concerning the future because of the disastrous political deadlock and instability”, Mr Bolbol added.
Lebanon is facing its worst economic crisis since its 1943 independence after defaulting on about $31 billion of eurobonds. The Lebanese pound has lost more than 80 per cent of its value against the US dollar, while inflation soared as high as 146 per cent in December 2020, according to the country’s Central Administration of Statistics. Annual inflation reached 85 per cent in 2020.
Meanwhile talks with the International Monetary Fund for a $10bn bailout package have stalled amid political bickering and the country’s economic woes were compounded following a massive explosion at the Port of Beirut in August that killed more than 200 people and devastated large parts of the capital.
Output across the Lebanese private sector fell last month as movement restrictions due to the pandemic curtailed economic activity. Lebanon recorded more than 380,000 infections and 4,805 deaths as of Wednesday, according to Worldometer that tracks the pandemic.
New orders received by Lebanese businesses as well as exports also dropped during the month, according to the report. Input prices, on the other hand, continued to rise in February.
Employment conditions in the country stabilised in February after falling continuously for 17 months.
But these improvements were beset by a pessimistic one-year business outlook by firms surveyed, which feared the country’s political instability could lead to a prolonged economic downturn.
Updated: March 3, 2021 06:04 PM