Number of cleared cheques in Lebanon (indicator of private consumption)

Private consumption in Lebanon suffers sharp decline as sentiment crashes amid a storm of political and economic volatility

Private spending in Lebanon, which makes up nearly 80% of the country’s GDP, has been unable to kickstart a recovery in 2023, with confidence remaining acutely frail. Business operations remain very risky and subject to sudden disruptions. MNCs operating in the market must assume little to no change in the addressable market size for this year. B2Cs are advised to continue targeting the resilient, highest-10%-income-bracket households; given their income is in USD, their purchasing powers will either remain strong or further strengthen. Create mitigation plans against the high financial and receivables risks, reducing exposure as much as possible.


  • The cost-of-living crisis in Lebanon continues to decimate private demand in 2023. Inflation is hovering around 190%, driven by imported inflation and currency volatility. Despite the futile devaluation in February, the central bank has failed to stabilize the currency, with the black-market rate fluctuating at around LBP 98,000 to the US dollar, while the official rate sits at 15,000.  
  • The political environment is growing more unstable. A recent exchange of rockets on the southern border raises the risk of a wider military conflict—particularly amid heightened provocations from Israeli police forces on worshipers during the holy month of Ramadan and Easter celebrations in Jerusalem. Security risks are further exacerbated with the ongoing gridlock in nominating a president, paralyzing any ability to pass reforms and steer the economy into a recovery trend.

Our View

FrontierView expects private sentiment to remain acutely depressed in Lebanon through 2023. Households and businesses are unlikely to increase their demand from current levels. Despite the government’s proposal to increase public salaries (to match an exchange rate of 87,000), real income is likely to remain far below pre-crisis levels. The increased money supply as a consequence of such a policy will fuel further volatility of the black-market rate. Tourism will offer a brief respite, lasting a few weeks during the summer period and winter-festive period, but will not be sufficient to create a substantial change in demand to be deemed a recovery. Recent insecurity risks will adversely impact the number of visitors to Lebanon in 2023.

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