Day by day, the negative impacts of the escalation of hostilities in Southern Lebanon on the country's economy are increasing. The daily exchange of shelling along the Lebanese-Israeli border has approached its third week, with no signs of nearing an end. Moreover, fears are growing that these clashes could expand to include the capital, Beirut, and various regions across Lebanon. This grim atmosphere has descended on most Lebanese citizens, compelling them to alter their lifestyles and behave as if the country is in a state of actual war, which has swiftly reflected negatively on most economic sectors in Lebanon, impacting an economy already beleaguered for about four years.
Most observers agree that if Lebanon enters a new large-scale war, it would have catastrophic repercussions for what remains of the national economy. In its current state, Lebanon is too weak to bear the costs of rebuilding infrastructure if it suffers damage, as the financial resources available to the state are scarce, barely enough to secure salaries for public sector workers.
Since the end of 2019, Lebanon has experienced its worst economic, monetary, and banking crisis in modern history, which has led to the collapse of the national economy and the disintegration of state institutions. The political forces in the country have failed for four years to find emergency solutions to mitigate the decline and revive economic life. The national currency has lost more than 90% of its value against the US dollar, while foreign currency reserves have fallen to around $8.7 billion. Additionally, the country's public debt has risen to over $102 billion, placing Lebanon among the most indebted countries in the world in 2023.
Lebanon is also experiencing significant inflation in the prices of goods and services, with recent data from the Central Administration of Statistics showing that the consumer price index in Lebanon increased by 208.5% in September 2023 compared to the same period in 2022, attributed to rising prices of various essential materials and services.
In this context, former Minister and head of the Economic Bodies in Lebanon, Muhammad Choucair, revealed in a special interview with "Sky News Arabia Economy" that Lebanon's economic situation is dramatically deteriorating from bad to worse following the escalation in Gaza and events unfolding in the southern part of the country. He added that this situation threatens the collapse of all economic sectors after four years of suffering due to the economic crisis, emphasizing that Lebanon is exhausted on various levels, both politically and economically. He confirmed that Lebanon cannot bear the costs of an expanding conflict under its current circumstances.
### Losses in Numbers
Choucair, who is also the head of the Chamber of Commerce, Industry, and Agriculture in Beirut and Mount Lebanon, pointed out that everything the economic sectors in Lebanon earned during the last summer season is currently being drained. He disclosed that what the economic crisis could not achieve in four years is now happening, threatening to annihilate the Lebanese private sector. The numbers, based on data and statistics collected from stakeholders across various economic sectors in Lebanon, showed the following:
- **Restaurant Sector:** Experienced a significant contraction, with a decline in business volume between 80 and 90%.
- **Hotel Sector:** Saw a tremendous drop, with current occupancy rates estimated between 5 and 10%, while some hotels are completely vacant.
- **Nightlife Sector:** Almost completely paralyzed, with declines reaching around 90%.
- **Events and Conferences Sector:** Most bookings and activities have been canceled.
- **Car Rental Sector:** Recorded a decline exceeding 90%.
- **Industrial Sector:** Experienced a decline of between 30 and 35%.
- **Commercial Sector:** Demand for food and daily essentials has increased as consumers stockpile, while demand for other goods and luxuries has dropped by between 50 and 70%.
- **Travel Movement:** Traffic through Rafic Hariri International Airport in Beirut noted a 33% drop in arrivals over the last ten days, while departures rose by 28%.
- **Maritime Transport Sector:** Experienced a decline in new non-oil import bookings through the Port of Beirut, alongside the suspension of certain export contracts due to importers' concerns.
- **Insurance Sector:** Saw a contraction in insurance policies for goods (imports and exports), along with clients ceasing to pay premiums due to a shift towards conserving liquidity.
Choucair warned that the expansion of the conflict signals catastrophic challenges ahead and called on all political forces and leaders to act to remedy the situation and implement measures to prevent further deterioration and prevent the country from falling into the abyss, as the cost of war is catastrophic.
He stressed the necessity of prioritizing stability, which would protect Lebanon from the dangers of wars and destruction, emphasizing that the outbreak of war would exacerbate the catastrophic challenges Lebanon is currently facing. Therefore, political forces must assume their national responsibilities, set aside differences, and come together to avoid slipping into the unknown.
Jean Beiruti, the head of the Lebanese Marine Tourism Institutions Syndicate, also expressed in a conversation with "Sky News Arabia Economy" his significant concern regarding the possibility of an expanded confrontation and Lebanon sliding into a comprehensive war with Israel, especially as the country lacks the capacity to sustain itself under the current collapsed circumstances. He noted that the tourism sector experienced a period of recovery during the summer of 2023, following a tragic period due to the pandemic and the Lebanese economic crisis.
**Freezing Work in 400 New Restaurants**
According to Beiruti, the promising summer Lebanon experienced set the stage for subsequent tourism bookings; however, the unexpected security events in Southern Lebanon following the "Al-Aqsa Flood" operation led to the cancellation of all these reservations, particularly with various embassies warning against travel to Lebanon. He indicated that about 400 new restaurants opened in Lebanon during the summer season, while some closed hotels began renovations in hopes of reopening their doors. However, what is happening currently could lead to a freezing of these developments.
Beiruti affirmed that Lebanon cannot bear the repercussions of any war, noting that officials are aware of this issue. From this standpoint, a plan needs to be established to help navigate the phase with minimal damage, emphasizing that the longer the situation remains as it is now, the more it will lead to further economic deterioration.
