Dissecting recent Lebanese economic developments

ENAR

A lot of rumors have been circulating lately regarding the economic situation in Lebanon. Every citizen, whether an economic expert or not, is worried about the liquidity in the system and is trying to analyze the different scenarios and probabilities of occurrence of an economic and/or financial crisis. On the economic front, growth in the Lebanese economy was capped between 0 percent and 0.5 percent in the first nine months of 2019, as indicated by the BLOM Purchasing Managers’ Index (PMI) level, and inflation remained subdued (see table below). The PMI shows private sector activity stalled at an average of 46.8 by September 2019, capped below the 50-mark separating contraction from growth. Meanwhile, inflation eased to 2.77 percent by August 2019, down from last year’s 6.29 percent, mainly owing to a 10.7 percent annual downtick in oil prices to $64.8/barrel. Within an environment of high interest rates and persistent slowdowns,