The private sector in a race against collapse

The repercussions of the war in Lebanon are deepening day by day, extending beyond their humanitarian and security dimensions to strike at the very core of an economic structure already weakened by years of collapse. With each passing day, losses accumulate and paralysis spreads, reflecting the fragility of the economic reality and its inability to absorb a shock of this magnitude.

Damage is no longer confined to specific sectors but has spread across all aspects of production and consumption, from tourism to industry, and from trade to agriculture, amid a sharp decline in economic activity and a shift in household spending priorities. While luxury sectors are collapsing, essential sectors are barely holding under the pressure of rising demand and complex supply conditions.

At the same time, the private sector is bearing an unprecedented burden, with its ability to continue diminishing in the absence of any real safety net, whether from an exhausted state or a disengaged international community. As the crisis enters its second month, signs of financial suffocation have become increasingly evident, particularly in terms of wages and business continuity.

In this context, attention is turning to the scale of mounting losses and the economy’s ability to withstand them, amid indicators pointing to greater risks if the war persists. Between a scenario of rapid recovery contingent on a near-term ceasefire and the possibility of sliding into a deeper crisis, Lebanon stands at a highly sensitive economic crossroads.

Losses in the millions

In this context, the head of the Lebanese Business Association, Dr. Bassem Bawab, told Nidaa Al Watan that daily war-related losses are estimated at around $100 million or more, divided between approximately $50 million in direct damage and a similar amount in indirect losses.

He stressed that “the sectors most affected are luxury sectors, while food, pharmaceuticals, and fuel sectors have shown relative resilience, with some even recording increased sales due to panic buying by citizens stockpiling essentials. In contrast, luxury sectors such as furniture, cars, and electronics have experienced a sharp and significant drop in sales.”

A snapshot of the numbers

Presenting the figures, Bawab noted that “the tourism sector has suffered a decline ranging between 80% and 85%, including restaurants and hotels, while the car rental sector has contracted by around 90%. The industrial sector has also been severely hit, with losses between 50% and 60% due to the inability to access key areas such as the Bekaa, the South, and the southern suburbs, while the commercial sector has declined by around 50%.”

The agricultural sector

In the agricultural sector, Bawab warned of extremely high costs, noting that “the South, which accounts for around 20% of local consumption, is now inaccessible, in addition to the damage sustained by most poultry farms in those areas and the inability of operators to reach them.”

He revealed that “after more than 40 days since the outbreak of the war, total losses have exceeded $4 billion, including both direct and indirect damage, with daily increases estimated at around $100 million. These include infrastructure costs and damage to buildings, as well as the electricity and water sectors, confirming that no commercial sector remains unaffected.”

Workers’ salaries

Regarding wages, he explained that “the first month passed with companies fully paying salaries without layoffs. However, the situation in the second month is becoming more complex, as some companies have begun reducing salaries to 75% or 50%, while others have become unable to pay at all, forcing them to place employees on partially paid or unpaid leave until the war ends and they can be recalled.”

He added that “the private sector’s ability to endure is limited, as most companies will not be able to continue for more than two to three months in the complete absence of external support.”

What about expatriates?

On the situation of expatriates, he noted that “it is no less difficult, as a number of them, particularly in Gulf countries, have been forced to leave their jobs,” adding that “this war differs fundamentally from previous ones, as it extends across the entire region, not just Lebanon.”

Serious repercussions

Bawab warned of serious repercussions for the economy, especially since “the private sector is already exhausted after six to seven years of collapse and successive crises, while the state is experiencing an unprecedented level of strain.”

He compared the situation to the 2006 war, noting that “the state and banking sector were then more capable of responding, and reconstruction began quickly thanks to available funding. Today, however, aid remains extremely limited, not exceeding 15% of what was previously provided, according to Prime Minister Nawaf Salam,” describing this as a “catastrophic indicator.”

He added that “the state is currently bearing enormous financial burdens, including the costs of relief and displacement, with around 1.2 million displaced persons, alongside declining international support, leading to a rapid depletion of the central bank’s reserves.” He warned that “if this trajectory continues for several months, possibly up to seven months, it could threaten exchange rate stability due to the central bank’s reduced ability to intervene.”

Prospects for recovery

As for recovery prospects, Bawab believes that “a near-term end to the war could open a window to offset losses within a few months, especially with the approach of the summer season, if expatriates and tourists return. However, if the war continues, the repercussions will be more severe, with most weddings and festivals being canceled or postponed to September and October, further deepening economic stagnation and delaying any recovery path.”

In conclusion, these indicators show that the Lebanese economy is on the brink of a more dangerous phase, where losses are no longer just numbers but have become a reality threatening the survival of businesses and the resilience of the market. As the strain continues and effective intervention or sufficient external support remains absent, the room for maneuver for the private sector is shrinking, while the pace of collapse is accelerating to a level that may become difficult to contain if the war persists.

Ultimately, the trajectory remains open to two opposing scenarios: either a rapid end to the war that gradually revives economic activity, benefiting from seasonal opportunities such as summer, or a prolonged crisis with deeper repercussions that could affect both monetary and social stability. Between these paths, one reality stands out: every additional delay will increase the cost and make recovery more complex and prolonged.