The weight of new taxes on Lebanese industry

As new taxes imposed by the government begin to take effect, concerns are rising about their impact on Lebanon’s productive sectors. At a time when industry remains one of the country’s last engines of real output and fresh dollar inflows, additional fiscal pressure could hit manufacturers particularly hard. The question is no longer whether the sector is resilient but how much more strain it can absorb.

A sector that never disappeared

Long overshadowed by finance and services, Lebanon’s industrial sector has not disappeared. It has contracted, adapted and rationalized, but it endures. In an economy weakened by banking collapse and a chronic shortage of foreign currency, industry remains one of the few sectors capable of producing, transforming and exporting. Behind successive crises, one reality persists: Lebanon still manufactures.

According to the latest available data and official figures from the Ministry of Industry, the country counted approximately 18,816 industrial establishments in 2023, a figure slightly adjusted to around 18,542 units by the end of 2024. These numbers encompass highly diverse structures, ranging from small family-run production units to fully structured, export-oriented companies. This industrial density, often underestimated, positions the sector as one of the quiet pillars of the national economy.

The social weight of industry

Beyond the number of establishments, it is the human weight of the sector that stands out. Harmonized data based on ILO and international estimates indicate that in 2023–2024, approximately 350,000 people were employed in industry, representing nearly 20 per cent of total employment. In other words, one in five jobs in Lebanon depends directly on the industrial sector. In an economy marked by high unemployment and prolonged contraction, this figure highlights a central fact: industry remains a major social stabilizer.

From a macroeconomic perspective, industry’s contribution to GDP was estimated at around 8 to 9 per cent before the crisis. In 2024, within an economy now valued between $20bn and $22bn, the industrial share continues to fluctuate between 7 and 10 per cent depending on calculation methods. While this proportion may appear modest, it conceals a significant multiplier effect. Industry feeds into logistics, transport, packaging and distribution, thereby generating a broader productive ecosystem that extends well beyond its direct value added.

The sectoral structure confirms this diversity. Agro-food accounts for approximately 26 per cent of industrial activity, construction materials 12 per cent, and chemical products nearly 8 per cent. Lebanon does not distinguish itself through heavy industry, but rather through value-added sectors that are agile and oriented toward regional markets and the diaspora. Processed food products, detergents and cosmetics, selected pharmaceutical segments, and jewelry rank among the most visible branches. This specialization enables the sector to adjust rapidly to regional fluctuations.

Exports: A lifeline of fresh Dollars

The true measure of this resilience is reflected in exports. In 2023, industrial exports reached approximately $2.55bn. In 2024, they remained stable at around $2.51bn despite a tense regional environment. In a country facing a structural shortage of foreign currency, these flows constitute a vital source of fresh dollars. Arab countries absorb roughly 39 per cent of industrial exports, Europe around 21 per cent, while the United Arab Emirates, Iraq, the United States and Egypt rank among the principal destinations. The UAE’s role as a regional logistics hub remains particularly strategic.

Yet this performance takes place under far from optimal conditions. Producing in Lebanon remains costly. Industrialists face high energy costs, an almost complete absence of productive financing since the banking crisis, imperfect logistics infrastructure and persistent political instability. Informal competition and geopolitical volatility affecting export corridors further complicate operations.

And still, despite these structural constraints, the sector continues to function. It sustains hundreds of thousands of jobs, generates approximately $2.5bn in annual exports and supports entire regions beyond major urban centers. This capacity for endurance reveals a largely untapped potential.

Sources told The Beiruter that

if energy costs were structurally reduced, if minimal productive credit were restored and if a coordinated national export strategy were implemented, industrial exports could reach $4bn to $5bn within five years.

Such a scenario would represent several additional points of GDP and provide sustainable stabilization of foreign currency inflows.

Lebanese industry is therefore neither marginal nor nostalgic. It is one of the last tangible productive pillars of a country long dominated by rent-seeking and financial services. In a Lebanon seeking economic recovery, one conclusion is clear: an economy cannot be rebuilt through services alone. It must also be rebuilt through what it manufactures.