Economic trends
Lebanon has a free-market economy with a strong laissez-faire (hands-off) commercial tradition. Following a drawn out civil war (1975-1990), Lebanon started to rebuild the country’s physical and social infrastructures by a massive reconstruction program in 1992. The government is continuing these structural reforms. Since the Israeli invasion and aerial attacks, the country’s GDP increased by almost 23% and in 2010 by 7% according to the IMF.
The particularity of the Lebanese economy is that it finds itself opposed to the current global economic cycles, since it is in full growth and has surplus liquidity. However, this economic situation is highly contextual: Lebanon is catching up on the delay caused by both its civil war and the 2006 war.
Lebanon offers very few basic utilities (water, electricity) and their cost borne directly by the final consumer, which strongly impedes potential growth.
The government’s key challenge will be reducing the national debt, which represents 150% of the GDP. Unemployment is officially at 18%, yet, in the absence of reliable statistics, it could in reality reach 20-25%. IMF estimates 2010 inflation at 5%.
The country is able to preserve its momentum in the coming years, if indeed the political situation does not worsen (regional tensions and results of the Special Tribunal for Lebanon following the assassination of Rafik Hariri)
Main branches of industry
The country’s sustained growth can be explained by the vigor of the key sectors of its economy. The banking sector saw record profits, profits of the three largest banks growing by 19% on 2009. The sustained and lucrative banking activity does not however constitute a real support to the private sector because the majority of liquidity coming from banks is used to finance the national debt.
Lebanon also has a booming real estate sector, which benefits from the burst of the real estate bubble in Dubai. Demand coming from the Arab countries is indeed very high and in the first half of 2010 the average price for m2 in the center of Bayreuth reached 7,000 UDS, equal to an annual growth of 41%.
Lebanon has fertile lands, however the agricultural sector is under-developed and only contributes up to 5% of the GDP.
International trade
Lebanon has strengthened its openness to international trade by signing an Association Agreement with the EU, by working toward accession to the WTO, and by signing a free-trade agreement with the Gulf Cooperation Council (GCC) in May 2004. According to half-year figures published by the Lebanese Higher Council for Customs, the total value of imports and exports reached almost 11 billion USD at the end of June 2010, an increase of around 12% compared to the level reached at the end of June 2009. The current share of foreign trade in the country’s GDP is around 65%. Its three main export partners are Iraq, Switzerland, and Syria. Lebanon mainly exports pharmaceutical products, textiles, tobacco, pearls & precious stones, electric & electronic equipment, iron & steel, salt, sulfur and machinery. Its three main import partners are Italy, France and Germany. The country mainly imports mineral fuels, oil, vehicles, machinery, pearls & precious stones, electric and electronic equipment. In the first half of 2010, the trade deficit reached 9.8 billion USD, an increase of 12% which reflects a certain vigor of domestic demand.
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Last updates: January 2012
