Lebanon's clothing sector was crippled by the month long war between Israel and Hizbullah earlier this summer. And the knock-on effects of the conflict have proved equally problematic for a sector that was just recovering from a slump caused by political turbulence in 2005. Paul Cochrane reports from Beirut.

Clothing manufacturers and retailers in Lebanon had high expectations for this summer.

A projected 1.6m tourists were expected to visit the country, and the economy was picking up after a sluggish 2005 which was marred by a spate of bombings that began with the assassination of former prime minister Rafik Hariri in February.

Until 12 July, when the war started, the clothing sector had managed to shake off last year's blues, experiencing 30% growth when compared to the first two quarters of last year. The war did more than put a spanner in the works however.

"We were expecting 6% growth for the whole economy this year, and now we are expecting zero growth," said Charles Arbid, vice-president of the Association of Lebanese Industrialists and general manager of clothing manufacturer and retailer Rectangle Jaune.

Enforced closures
During the war, with up to one million people displaced, distribution difficult, and the economy at a standstill, numerous manufacturers and retailers were forced to close.

Furthermore, the three most important months for clothes sales in Lebanon are in July, August and December, accounting for 35-40% of annual sales.

Due to the conflict, the sector lost these crucial summer months, evident throughout the country with retailers offering up to 70% off summer collections.

Lebanon's businesses were also held hostage to Israel's 56-day sea blockade and, during the war, only one safe border crossing open with neighbouring Syria.

"The blockade was extremely negative. The whole supply of raw materials and fabrics are imported from Europe and the Far East; very few fabrics are produced locally," said Arbid.

"For one and half months we were cut off from the world. This delay affected imports, production and exports."

Labour displacement
The other factor the sector faced during the war was the displacement of the labour force, especially sub-contractors located in Beirut's southern suburbs and the south - areas that took the brunt of Israel's bombing campaign.

Sleiman Khattar, president of the Syndicate of Textile Industries, said around 35% of the syndicate's members are based in the southern suburbs, mainly sub-contractors with small sewing shops of as a few as five workers.

"Some disappeared off the map, others are now starting up again," he said.

In total, some 16 clothing and textile factories were destroyed and some factories partially damaged in the conflict.

"The chain of production has been disturbed. The biggest problem is indirect losses, with approximately 50% of all textiles produced affected, valued at around US$10m," said Khattar.

Lost orders
With a link missing in the production chain, Arbid said the sector lost many orders to neighbouring countries, particularly for Ramadan, the Muslim holy month of fasting and a popular time for buying presents and clothing.

"We don't expect recovery to take place tomorrow. We lost cruise speed," said Arbid.

The other factor facing the sector is that of cash flow. With retailers struggling to pay off loans for collections and with sales down, manufacturers may have to lay off staff.

Furthermore, due to the moribund economy, Arbid said a lot of manufacturers are thinking of relocating to Syria, Jordan or Egypt, where there is more stability and lower overheads.

Arbid, however, remains positive about the future. "We will recover for sure, I'm 100% certain. This is Lebanon, and Lebanese industrialists perform under pressure.

"Definitely September sales picked up a little bit; but with Ramadan now on, and Christmas coming up, sales should pick up again."