Lebanese industry's costly resilience

Despite the successive crises that have battered the Lebanese economy in recent years, the industrial sector has remained one of the country's most resilient, maintaining a measure of productive activity. Today, however, it faces mounting challenges, from declining domestic consumption and falling exports to rising operating costs and the direct consequences of the security and economic pressures weighing on every stage of production.

Amid frequent discussion of Lebanon's heavy reliance on imports, questions continue to arise about the true scale of local production and its role in meeting domestic demand. As factories struggle to remain operational and policymakers look for ways to strengthen national production, Ziad Bekdache, vice president of the Association of Lebanese Industrialists, offered a broad assessment of the sector's condition, the challenges it faces, and what he describes as a more accurate picture of imports and local industry's share of the Lebanese economy.

Bekdache argues that Lebanese industry has suffered from neglect since 1975.

"Historically, it has been one of the sectors that received the least attention from Lebanese policymakers," he said, noting that parts of Lebanese society have also long viewed industry unfavorably despite the country's once-strong export base across multiple sectors.

He said the industrial landscape began to change gradually after 2019, as the depreciation of the Lebanese pound and the effects of the COVID-19 pandemic encouraged the growth of factories and production lines. The period also saw the emergence of industries that had not previously existed in the local market, ranging from the manufacture of gloves and face masks to the production of robots for export.

A traditional mindset

Bekdache believes one of the sector's fundamental challenges is the longstanding preference for imported goods over local products.

For years, he said, the popular belief that "everything foreign is better" shaped consumer attitudes. The economic crisis that began in 2020, however, pushed many Lebanese consumers to seek more affordable alternatives, leading them to discover that numerous Lebanese-made products offer quality comparable to imported goods. While some imported products are excellent, he added, others fall short of expectations.

The current situation

Bekdache said both the economy in general and the industrial sector in particular continue to deteriorate.

Factories located in less secure areas, particularly Beirut's southern suburbs, the Bekaa Valley and southern Lebanon, were forced to suspend operations during periods of heightened tension. Many are now attempting to gradually resume activity in order to maintain at least a minimum level of production for both local and export markets.

By contrast, factories in more stable regions, especially those producing food products and other essential goods, continue to operate at near-full capacity. Even so, these businesses have experienced a noticeable decline in exports. Producers of non-essential and luxury goods have been hit particularly hard, with output falling by between 70% and 90% as demand weakens amid continued economic and security uncertainty.

According to Bekdache, consumption has declined even for food and other basic goods, while aid provided by international organizations to displaced populations has offered only limited support to economic activity.

The biggest challenge

Bekdache identified exports as the industry's greatest challenge today.

The difficulties stem not only from current economic and security conditions but also from previous export constraints that affected trade with Saudi Arabia, historically one of Lebanon's most important markets.

He estimated that industrial activity has declined by between 45% and 50%.

Unlike commerce, he noted, industry carries significant operating burdens. Production involves both fixed and variable costs, meaning expenses increase as output rises while fixed obligations such as salaries, rent, electricity and machinery maintenance remain unchanged regardless of production levels.

What about the workforce?

On the employment front, Bekdache said Lebanese workers have become accustomed to navigating recurring crises.

Many day laborers lost their jobs following the outbreak of the war. University and school students who traditionally rely on seasonal summer work in factories and restaurants also face the prospect of far fewer opportunities this year.

He warned that the continued closure of factories is placing employers under increasing pressure, making it difficult to continue paying wages as sales decline sharply or disappear altogether.

Bekdache said the industrial sector is experiencing one of its most difficult periods since the 1980s. Before 2019, banks played a supportive role for productive sectors, he said. Today, industrialists face a slow and exhausting process of attrition that he likened to a "slow death."

The import question

Bekdache argued that the commonly cited claim that Lebanon imports 80% to 90% of its needs is inaccurate.

Based on 2025 figures, Lebanon imported roughly $21 billion worth of goods, a level even higher than in 2019, when economic conditions were comparatively stronger. However, he stressed that this figure includes approximately $3 billion worth of gold and silver, which are not direct consumer goods, as well as around $4 billion in fuel imports that cannot be directly compared with industrial or consumer exports. Imports also include nearly $1 billion worth of live animals, scrap materials, fruit and automobiles that are not produced domestically.

After excluding these categories, Bekdache estimates that actual consumer imports amount to between $11 billion and $12 billion. Of that total, roughly $4 billion consists of raw materials used by Lebanese factories rather than finished consumer goods. This reduces effective consumer imports to approximately $7 billion to $8 billion.

He estimates that Lebanese industrial production for the domestic market is worth at least $10 billion, meaning local industry accounts for roughly 56% of the Lebanese market.

As a result, he argues that the widespread perception that Lebanon consumes most of its needs from abroad does not accurately reflect economic reality.

Lebanese industry today faces a difficult test, balancing the challenges of production, exports and declining domestic demand while businesses come under increasing pressure to remain viable. Although the sector has repeatedly demonstrated its ability to adapt and endure, its future remains closely tied to improvements in the country's economic and security environment and the availability of meaningful support for productive activity.