This decline cannot be separated from the general scene in the country. The war, the security escalation, and the fear of expanding strikes did not only strike the borders or the southern villages, but also reached the markets, the consumer decision, the movement of expatriates and tourists, and the merchant’s ability to plan even for one week. The crisis in retail trade came at a more sensitive time, because it coincided with the continued rise in prices, as during the first quarter of 2026, inflation recorded an increase approaching 7 percent, according to official price indicators. This percentage, although it appears lower than the levels of inflationary explosion that Lebanon has experienced in recent years, remains very heavy on a weak market and on a consumer who has lost a large portion of his purchasing power. The Lebanese today do not buy less because they do not want to, but also because they cannot, or because they fear what is coming. Under normal circumstances, retail trade could compensate for part of the weak local demand through tourism and expatriates, especially during the holiday seasons. But this factor declined strongly this time. Trade related to tourism, including restaurants, cafes, clothing, gifts, and entertainment services, received a severe blow after the movement of expatriates declined by very large proportions in some periods, reaching, according to market estimates, approximately nine tenths of the usual movement. Many expatriates canceled their trips, and many visitors preferred to wait, while travel warnings issued by a number of countries increased the level of anxiety.
The disturbing emptiness
In this sense, the Lebanese market has lost one of its most important drivers. The expatriate does not come only as a visitor, but as a consumer who is able to operate in a wide range of sectors: from the hotel to the restaurant, from the clothing store to the supermarket, and from the taxi to the gifts and services sector. When this consumer disappears at once, the market quickly feels empty.
In Beirut and Mount Lebanon, the scene was not much better. As the fear of escalation expanded, movement in markets, streets, and commercial centers declined. The consumer has become more cautious, the merchant has become more anxious, and unnecessary purchases have become postponed. This behavior is economically understandable, because people in times of war do not behave as they do in times of stability. Priority becomes liquidity, food, medicine, and fuel, not entertainment, luxuries, or seasonal purchases.
In the south, the picture is more severe. Retail trade there has not only declined, but in a number of areas it has almost stopped. Air strikes, artillery shelling, displacement, road closures, and a decline in movement between villages and towns, all made daily commercial activity almost impossible.
On the other hand, it is noteworthy that inflation did not hit all sectors in the same way. The largest increase appeared in sectors directly related to lifestyle and services, as the recreation, entertainment, and culture sector recorded an increase of approximately more than 40 percent, while the cost of education rose by more than 35 percent, transportation by about a quarter of the previous cost, and food and non-alcoholic beverages by approximately 20 percent.
Interior mirror
Economically, the danger of what is happening is that retail trade is a direct mirror of internal demand. When this sector weakens, this means that consumption declines, liquidity in the market narrows, and the profits of small and medium enterprises shrink. These institutions are not marginal in Lebanon, but rather constitute an essential part of the economic cycle and daily job opportunities. Therefore, the decline in retail does not remain within the stores, but rather is transmitted to workers, suppliers, importers, real estate owners, and even municipalities that depend on the market movement.
Perhaps the merchants whose voices are being heard due to the government’s reluctance is the best evidence of this, as the problem is no longer the decline alone, but rather the absence of shock absorption tools, as until now, a clear stimulus package allocated to the sectors affected by the war has not emerged, and no government program has been announced to compensate for the losses of merchants or support small enterprises that have lost a large portion of their sales. In a country suffering from significant financial limitations, the state’s ability to intervene may be weak, but the absence of any plan leaves the market alone in the face of a complex crisis.
This official absence raises a broader question: Can the retail sector survive if the escalation continues for a long time?
The answer is not simple. Some institutions have reserves or the ability to reduce expenses, but a large portion of small shops survive on daily activity. If the customer is absent for two weeks or a month, the problem begins. If the absence is prolonged, closure becomes an option, not because of mismanagement, but because of the absence of the minimum level of stability.
