BLOM Lebanon PMI continued its improvement and surpassed the 50 mark, recording 50.6 in January 2025 up from 48.8 in December 2024 – the highest level since the survey began in May 2013; indicating that Lebanese private sector business activity expanded this month. After the election of President Joseph Aoun and the ceasefire agreement in Gaza strip, new orders and business activity of private sector companies grew for the first time since July 2023 and at the highest rate since May 2013. Moreover, the ease of the internal political deadlock with the openness of Arabic countries, especially Gulf countries, to aid Lebanon in economic recovery has led to substantial optimism of surveyed businesses regarding the future. As aresult, “Future Output Index” – a gauge of business expectations for the next 12 months – recorded all time-high of 75.1.
That said, as per as per the Central Administration of Statistics (CAS), the Consumer Price Index (CPI), representing the evolution of goods and services’ prices consumed by households, revealed that Lebanon’s annual inflation rate increased to 18.12% in December 2024, from 15.38% in November 2024. On a monthly basis, the Consumer Price Index (CPI) rose by 2.39% in December 2024. The drop in annual inflation is partly due to increased dollarization in the economy and the stabilization of the exchange rate at around 89,500 LBP per USD since August 2023. In details, it is worthwhile to note that Owner Occupied (13.6% of CPI) soared by 31.67% YOY, Education (6.6% of CPI) increased by 31.27% YOY, and Health (7.7% of CPI) rose by 22.93% YOY during the same period. It is worth mentioning that “New Rent” increased YOY by 35.75% despite that the cease-fire agreement started in November 27th, 2024 as some displaced people who lost their houses are hesitant to return to their villages as Israel is still breaching the cease-fire agreement in addition to the fact that most of them have paid the rent for 6 months or a year in advance. Moreover, “Health” increased by 22.93% annually due to the war as tens of thousands were injured and needed treatment.
Also, the number of airport passengers rose by 151.28% to 380,052 in December 2024 compared to the previous month which may have been influenced by the ceasefire that began on November 27. The overall airport activity in Lebanon gradually returned to a semi-normal state. International airlines resumed operations in the country, providing more flight options for travelers. As a result, ticket prices to Lebanon saw a slight decrease, reflecting the stabilization of the situation and the growing confidence in the safety of air travel to the region. Total number of airport passengers in 2024 fell by 20.84% to 5,622,358 passengers compared to last year.
And the data released by the Ministry of Tourism revealed that the number of incoming visitors witnessed an annual drop of 32.49% by November 2024, reaching 1,057,396. This drop is due to the security situation in Lebanon, which made tourists hesitant to travel to the country despite the ceasefire agreement that started on November 27. Additionally, Middle East Airlines was the only airline operating at the time. In details, Europeans grasped the lion’s share of 40.94% of the 2024 total number of tourists till November 2024. Travelers from the Arab countries came in second, grasping a share of 24.28% while American tourists constituted 20.41% of the 2024 total number of tourists till November 2024. In more details, the number of European tourists dropped by 32.63% year-on-year (YoY) to 432,883 by November 2024. Furthermore, the number of tourists from the Arab countries declined by 35.79% YoY to reach 256,689. Lastly, tourists from the American continent fell by 32.74% YoY to reach 215,858 visitors by November 2024.
Moreover, total cumulative container activity at the Port of Beirut dropped by 8.57% annually to 756,737 TEU in 2024. Transshipment activity, which involves cargo transferred from one ship to another at an intermediate port, decreased by 27.87% to 200,134 TEU during the same period due to higher insurance and shipping premiums and safety concerns, leading to the redirection of some cargo to other ports. Meanwhile, container activity, referring to cargo loaded onto or unloaded from ships at the port; saw a slight increase of 1.16% to 556,603 TEU, indicating that the sum of local demand and supply for goods remained relatively stable.
Additionally, as stated by the General Directorate of Land Registry and Cadastre (LRC), the cumulative number of real estate (RE) transactions reached 32,056, valued at $3.3B by November 2024. Moreover, on a monthly basis, the number of RE transactions decreased by 34.3% YOY from 3,805 transactions in November 2023 to 2,500 in November 2024, and compared to 3,126 transactions in October 2024. The value of real estate transactions in November 2024 reached $303.54M. Beirut held the largest share of the total value at 41%, amounting to $124.5M. Baabda followed with 24.76% of the total value, equivalent to $75.16M. Due to the war with Israel, no real estate transactions occurred in Nabatieh and South governorates. However, with the ceasefire starting November 27, a rise in transactions is expected in the coming months.
And according to the data published by the Association of Lebanese Banks’ (ABL), the total number of cleared checks in the Lebanese financial system decreased remarkably by 57.2% year over year (YoY) to 185,893 checks in 2024. However, the cumulative value of cleared checks in local currency increased by 19.07% YoY to LBP 78,511B in 2024. This upsurge in value of Lebanese checks given that the number of Lebanese checks issued decreased reflects higher denomination in LBP per check due to the exchange rate depreciation. However, the cumulative value of cleared checks in foreign currency dropped by 60.54% YoY to $ 1,299M in 2024. In addition, Banque du Liban (BDL) recently issued Circular 165, which permits depositors to make payments by check starting June 1st, 2023, as long as their accounts are in either fresh US dollars or Lebanese lira. To support this initiative, BDL has introduced a new clearing system, distinct from the one dedicated to pre-crisis deposits. This circular serves a dual purpose: it encourages customers to open new accounts in both Lebanese pounds and US dollars, while also aiming to decrease the country’s dependence on cash and stimulate economic recovery. As such, in December 2024, the cumulative number of checks issued from fresh accounts reached 32,614, of which 22,846 checks are in USD currency amounting $302.04M and 9,768 checks are in LBP currency amounting LBP 18,112B. On a monthly basis, the number of cleared checks in December 2024 was 4,092 checks.
As to the balance sheet of Banque du Liban (BDL), the Central Bank’s total assets declined by 13.44% annually, to reach $93.22B by mid-January 2025, amid adopting the 89,500 LBP/USD official rate by BDL since February 1st 2024. The fall was mainly due to the 80.60% and 24.49% year-on-year (YOY) drop in deferred open market operations and valuation adjustment, which reached $1,554M and $33,061M by mid-January 2025. Furthermore, the gold account, representing 26.59% of BDL’s total assets, increased by 30.87% yearly to reach $24.79B by mid-January 2025. BDL foreign reserve assets, consisting of 11.1% of total assets (after transferring the Eurobonds to securities portfolio and the other resident and / or illiquid assets to loans to financial sector) rose by 10.29% YOY and stood at $10.35B by mid-January 2025. Additionally, foreign reserve assets increased by $210.47M in the first two weeks of January 2025, despite the two months payments for circulars 158 and 166 and the payments for USD public wages. On the liabilities front, financial sector deposits, representing 91.42% of BDL’s total liabilities, decreased by 4.22% annually and reached $85.22B by mid-January 2025 compared to last year, of which more than 90% are denominated in dollars. Moreover, public sector deposits, representing 6.54% of BDL’s total liabilities, dropped by 53.88% yearly and reached $6.1B by mid-January 2025. Lastly, currency in circulation outside of BDL, consisting of 1.01% of BDL’s total liabilities, plunged by 75.38% annually to reach $939M by mid-January 2025 amid adopting the 89,500 LBP/USD official rate by BDL, though it increased by $206 million in the first two weeks of January 2025.
In relation to Lebanon’s consolidated commercial banks’ balance sheet, total assets declined by 8.49% on year over year (YoY) basis to stand at $103.02B by November 2024 amid BDL’s adoption of a new exchange rate of LBP 89,500 per USD effective 31/01/2024. On the assets side, currency and deposits with Central Bank represented a high figure of 77.92% of total assets; they dropped annually by 4.86% to settle at $80.28B in November 2024. Deposits with the central bank (BDL) represented 99.92% of total reserves, and decreased by 4.25% YoY, to reach $80.21B in November 2024. Furthermore, vault cash in Lebanese pound declined by 89.32% on a yearly basis to stand at $64.73M by the same period. On the liabilities side, resident customers’ deposits were the main account, representing 65.28% of total liabilities; they dropped by 7.62% since November 2023 to reach $67.25B by the month of November 2024. In more details, deposits in foreign currencies (being 99.05% of resident customers’ deposits) declined by 4.10% YoY to reach $66.61B by November 2024, additionally deposits in LBP (0.95% of resident customers’ deposits) fell by 80.83% YoY to stand at $641.29M by November 2024 especially after applying the new official exchange rate of 89,500. As for non-resident customers’ deposits, grasping 20.31% of total liabilities, they recorded a drop of 1.24% YOY and stood at $20.92B in November 2024. In details, the deposits in LBP fell by 84.03% to reach $30.66M and deposits in foreign currencies declined by 0.49% to reach $20.89B over the same period. In addition, non-resident financial sector liabilities remained at 2.44% of total liabilities and decreased by 16.74% YoY to reach $2.52B in November 2024.
According to BDL’s latest monetary report, the Balance of Payments (BOP) recorded a surplus of $7,229.4M by November 2024, far higher than the surplus over the same period last year $1,645.7M. Net Foreign Assets (NFAs) of BDL rose by $6,216.4M while the NFAs of commercial banks increased by $1,013.0M by November 2024. In the month of November 2024, the NFA of BDL decreased by $1,167.0M and the NFA of commercial banks rose by $182.6M, generating a deficit of $984.4M.
Also, according to market sources, Lebanese car market expanded by 25.05% YoY by in 2024 to 8,226 cars. On a monthly basis, 637 cars were sold in December 2024 in which Japanese cars grasped the lion’s share with a stake of 38%, followed by Chinese cars, and Korean cars (20% each). Lebanon’s car sector expanded since 2021; however, sales of passenger vehicles were significantly lower than 2019 levels when cars were still being purchased through checks. Currently, the demand for new vehicles is restricted by the absence of financing options, exacerbated by the lower purchasing power of the people, though it has improved in the past couple of years.
In conclusion, January PMI rose to all-time high of 50.6 signaling a notable expansion in the Lebanese private sector business activity. The ease of the internal political deadlock and security issues in the region, in addition to the election of a new president after two-and-a-half year of void and the designation of Mr. Nawwaf Salam to form a new reform-committed government, all increased confidence in the country regarding political stability. We hope this translates to better governance, and to structural and financial reforms, thus leading to economic recovery and renewal.
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