The war in Gaza, internal security risks, and weak purchasing power lead to a fall in sales and new orders in March 2024

Expect to see lower-than-expected consumption into Q3 2024

Businesses operating in Lebanon must plan for high operational risks and heightened uncertainty into Q3 2024. Review your demand assumptions for the summer season, accounting for lower-than expected tourist arrivals. Currently, the biggest damage to multinationals will likely come in the form of disruption to out-of-home consumption and demand for premium and ultra-premium goods, which had remained largely immune to volatility in the past two years. Work closely with local partners to run effective demand planning practices in a bid to capitalize on the limited surge in demand. Finally, while the lira remains relatively insulated from external factors, firms should continue to monitor ongoing developments (including the unification of rates for foreign transactions), with signs pointing to an inevitable devaluation of the lira, at around 90,000 LBP to the dollar.


Israel and Hezbollah continue to trade fire across Lebanon’s southern border, with near-daily cross border exchanges of fire. Recent developments include an Israeli drone targeting a car on the internal road between Tyre and Sidon, resulting in one fatality. On April 22, Hezbollah said it had fired dozens of Katyusha rockets at an army headquarters in northern Israel in response to raids targeting villages in southern Lebanon.

Head of the Lebanese Forces (LF) Jbeil district office Pascal Sleiman was kidnapped on April 8, 2024. Despite official investigations linking the crime to gang violence, various parties in Lebanon claim the kidnapping is linked to political violence.

The LF did not directly blame Hezbollah, but supporters of the party and several of its cadres have claimed that the latter was trying to send a message to its opponents. Violence against Syrian refugees has spiked since then, with Syrian refugees’ cars, homes, and other properties being targeted.

France’s President Emmanuel Macron met with PM Najib Mikati and Army Chief Joseph Aoun to discuss the situation in the South of Lebanon as well as an end to the country’s ongoing political stalemate.

Our View

FrontierView expects the following impacts on consumer spending in Q2/Q3 2024:

  • We have revised down our consumer spending forecasts for 2024 from 2.9% YOY to 2%, accounting for lower tourist arrivals during Q3 2024. In a downside scenario, which would entail a significant escalation in Israeli military operations across Lebanon, tourism inflows would virtually cease, causing a contraction in consumer spending in Q2/Q3 2024. 
  • The lira will remain relatively stable in the coming few months, while the inflows of dollars will be at a lower level than those seen in the same period in 2023. A downside scenario would stop a vital source of FX inflows and likely lead to rapid depreciation of the lira. 
  • We have revised down our GDP forecast from 2.9% to 2.1% YOY.

Political Dynamics: Sectarian and political fractures will only deepen in the coming months, with the risk of further protests by LF supporters highly likely in the coming weeks. Though armed clashes between political factions remain unlikely, the country has edged closer to such a downside scenario with our risk probability rising notably. The warning period has also been shortened, should a sectarian conflict erupt, given the high levels of tension.  Alongside this, calls to deport Syrian refugees will increase and already-existing anti-refugee sentiment will remain elevated. Expect the governmental and presidential vacuum in Lebanon to continue throughout H1 2024, with limited executive powers for the caretaker government.

War in Gaza Impact: Firms can expect to see continued tit-for-tat attacks and tensions in the South throughout Q3 2024. Hezbollah is likely to intensify the scope and severity of attacks into Israel, particularly as the latter continues to target both civilians and Hezbollah soldiers, infrastructure, and agricultural land. Consumption will remain severely disrupted in the South throughout 2024. While demand will see a slight uptick in other areas throughout the summer season, consumption levels will be lower than those seen in 2023.

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