Bank Audi has published its economic report for the first quarter of 2024, highlighting that economic and monetary conditions indicate a recession in the real economy, attributed to the repercussions of the war on Lebanon’s southern border.
However, the LBP has remained stable against the dollar, offering a degree of monetary stability despite the negative impacts of the war and the increase in civil servants’ salaries.
The study highlights that the contraction observed in various real sector indicators over the past six months, since the beginning of the war, reinforces the theory of economic stagnation. Among these indicators, the Bank Audi report mentions a 14% decrease in building permits. Additionally, airport activity has also been affected, with an 11% decrease in the number of passengers, a 13% decrease in exports via Beirut airport, and a 24% decline in tourist arrivals.
Regarding the monetary situation, the report highlights that the Lebanese pound has remained stable against the dollar over the past twelve months, while the Central Bank of Lebanon (BDL) has continued to increase its foreign currency reserves, which grew by $283 million throughout the year.
In the same context, it is important to mention that annual inflation, which had soared to 366% in March 2023, plummeted to 36% by March 2024. Despite the exchange rate remaining relatively stable over the past year, the inflation of the Lebanese pound has been mirrored by a comparable inflation of the dollar during the same period, thus generating considerable strain on the social and economic conditions of families.
As for the banking sector, it has been reported that the first two months of the current year saw a decrease in foreign currency deposits totaling $909 million, bringing the total to approximately $90.371 billion.
Concerning Eurobond prices, they remained stable at 6.500 cents per dollar across the entire yield curve. It is worth noting that they had surged to 7.875 cents per dollar just before the onset of the war in the Gaza Strip.
