Lebanon’s Trade Deficit Down by 2.3% YoY to $14.2B in 2024

According to the Customs Administration, Lebanon’s trade deficit fell by 2.3% year-on-year (YoY) to $14.2 billion in 2024. Total imported goods dropped by 3.55% YoY to $16.9 billion, while total exports decreased by 9.6% YoY to $2.7 billion in 2024. The decline in imports and exports in Lebanon is primarily due to the Israeli-Hezbollah war and disruptions in the red-sea. Interestingly, import levels remained high despite the troubled 2024 year, mostly because it is widely recognized that Lebanese GDP is underestimated. To that effect, new, higher GDP estimates are now being put out by international institutions.

The decrease in imports reflects the reduced demand for non-essential goods amid the conflict. This is because:

1. Shift in Priorities: During wartime, people tend to focus on essential goods, reducing demand for non-essential items.
2. Reduced Purchasing Power: Many individuals lose their jobs during conflicts, resulting in reduced purchasing power and decreased demand for imported goods
3. Increased Costs: The prices of imported goods rise due to higher risks, insurance premiums, and potential rerouting of goods, making trade more expensive

The decrease in exports reflects the reduced demand for Lebanese goods during the war. This is because:

1. Damage to Infrastructure and Labor: Conflicts often damage factories and disrupt labor forces, reducing the production capacity of goods available for export.
2. Increased Transportation Costs
3. Delayed Deliveries: Goods take longer to arrive at their destinations due to logistical challenges and disruptions in transportation networks
4. Infrastructure Disruption: The bombing of the Masnaa passageway made it more difficult and costly to export goods, particularly agricultural goods that spoil quickly. This situation has been further exacerbated by a reduction in air freight, especially during the last quarter of the year. For a detailed analysis of the impact of the Masnaa passageway bombing on Lebanese trade, please refer to our article: Main Passageways of Lebanese Imports and Exports.

The top three import destinations in 2024 were China, Greece, and Switzerland, accounting for 11.55%, 8.65%, and 6.57% of the total value of imports, respectively. The total value of imported goods from these countries was $1.95 billion, $1.46 billion, and $1.11 billion. The top imported products were mineral products (25.96%) at $4.39 billion, pearls, precious stones, and metals (15.22%) at $2.57 billion, and products of the chemical or allied industries (8.23%) at $1.39 billion.

On the exports side, the top three destinations were the United Arab Emirates, Iraq, and Turkey capturing respective shares of 19.06%, 5.82%, and 5.67% of the total value of exports. The total value of exported goods to these countries was $516 million, $157 million, and $154 million. The top exported products were pearls, precious stones, and metals (21.14%) at $572 million, prepared foodstuffs, beverages, and tobacco (15.24%) at $412.6 million, and base metals and articles of base metal (15%) at $405.64 million.

Source: Customs Administration, BLOMINVEST

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