War in the Middle East Weighs Sharply on Lebanon’s Economy in March

The BLOM Lebanon PMI for March 2026 fell sharply to 47.4 from 51.2 in February, dropping below the 50.0 threshold for the first time in eight months and marking a 17-month low, as private sector conditions in Lebanon deteriorated amid the escalation of the conflict between Hezbollah and Israel. The decline was primarily driven by a pronounced contraction in output and new orders, with both domestic and external demand weakening significantly as the conflict disrupted economic activity, leading to order cancellations, postponed spending, and a sharp drop in export demand. At the same time, supply-side pressures intensified, with delivery times lengthening to their greatest extent in three years due to logistical disruptions, while firms responded by cutting purchasing activity and reducing inventories to manage costs. Although employment remained broadly stable, it edged slightly lower in line with declining workloads, as rising input costs – driven by higher energy, transportation, and import prices – added further strain on businesses. Overall, the March reading reflects a clear reversal from the recent period of expansion, underscoring the vulnerability of Lebanon’s private sector to heightened geopolitical uncertainty and its impact on demand, confidence, and overall economic activity.

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