Lebanon Government Consumption (ann. var. %)

The economy likely shrank for the fifth consecutive year in 2022 on ongoing financial, FX and sociopolitical crises. The private-sector PMI averaged well in contractionary territory, while the economic activity indicator tumbled year on year through August. However, a tourism recovery will have tempered the downturn. Turning to 2023, conditions are bleak. The private-sector PMI continued to point to contraction in January–February, while a collapsing parallel-market currency and a series of FX devaluations will be decimating consumers’ purchasing power. The official exchange rate was repegged at LBP 15,000 per USD in February, and in recent days the Sayrafa rate and the payment rate for customs tariffs were devalued to LBP 70,000 and 45,000 per USD respectively. The lack of a new president and cabinet continues to paralyze crucial reforms.