Business conditions in Lebanon’s private sector deteriorated marginally in May despite new export orders rising at their fastest rate in almost eight years.

The country's Blom purchasing managers’ index, a measure of the strength of its private sector, fell to 49.4 in May, from April’s 49.5.

Readings above 50 signal an improvement in business conditions on the previous month, while one below shows a deterioration.

“This slight drop can be attributed to a decline in employment. However, amid this decline, an interesting trend emerged as new export orders witnessed an increase,” Stephanie Aoun, research analyst at Blom Bank, said.

“This can be explained by the devaluation of the Lebanese currency against the US dollar, which has made Lebanese goods more competitive in the international markets.”

Lebanon's central bank devalued the pound in early February, with the official exchange rate changing to 15,000 to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the dollar.

The official exchange rate changed to 15,000 pounds to the US dollar, compared with the peg in place since 1997 of 1,507.50 to the greenback.

Lebanon is going through its worst economic crisis in decades. Inflation hit an annual rate of about 269 per cent in April as the country's currency continued to lose value on the parallel and official markets since it was devalued by 90 per cent at the start of February.

Lebanon's economy contracted by about 58 per cent between 2019 and 2021, with gross domestic product falling to $21.8 billion in 2021, from about $52 billion in 2019, according to the World Bank – the largest contraction on a list of 193 countries.

The World Bank estimates that the real gross domestic product declined by 2.6 per cent in 2022 and is projected to contract by 0.5 per cent this year.

The country's economic crisis is being exacerbated by a political impasse that has blocked the formation of a new government and the enactment of reforms required to unlock billions of dollars in aid from the International Monetary Fund and other international donors.

The country has grappled with a presidential vacuum since the departure of former president Michel Aoun from office in October.

Lebanon’s parliamentary opposition formally nominated former finance minister Jihad Azour for the presidency on Sunday, moments after MP Michel Moawad announced the withdrawal of his own candidacy.

“Looking ahead, there is a sense of optimism among businesses in Lebanon, as they anticipate a potential boom during the summer season. This optimism is driven by several factors, including the expected influx of tourists and a better overall capability to deal with the crisis,” Ms Aoun said.

“It is expected that the PMI in the upcoming months will display a more positive trajectory.”