Economic trends
Lebanon has a free-market economy with a strong laissez-faire (hands-off) commercial tradition. Since the end of the long civil war (1975-90), Lebanon has implemented an extensive program of reconstruction of basic infrastructure and social and structural reforms have been initiated. The country has experienced a real boom, catching up where it fell begind due to the civil war and the 2006 war. After reaching record levels between 2007 and 2010 (8% growth in average), the Lebanese economic growth slowed down sharply in 2011 (1-2%) due to internal political tensions and revolutions happening in the Middle East (including Syria). The sectors driving growth (real estate, tourism, wholesale) were affected. Growth is estimated at 3-4% for 2012.
The Lebanese authorities are facing with many challenges. Although declining, public debt remains high (over 125% of GDP), the current budget deficit is persistent and there are fears of a possible contagion from Syria. The new government has taken steps to improve the social situation (price controls on basic commodities, higher wages) as well as undertaken initiatives to stimulate the economy (projects to mine hydrocarbon deposits). In February, Prime Minister Najib Mikati has reviewed the proposed budget in 2012 (rejected by Parliament in January) by introducing a ceiling for the budget deficit (5% of GDP) and for public debt (100% of GDP) and also measures to stimulate growth and control inflation. It counts on rationalizing spending, reducing debt, reforming the tax system and paving the way for privatizations.
Unemployment is officially estimated at 18% but in the absence of reliable statistics it could in reality reach 20-20%. There are significant social inqualities.
Main branches of industry
The banking sector is the piller of the Lebanese economy and during the recent years it saw record profits.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. Tourism represents 25% of jobs and 20% of the country's revenues. The sector was booming until a drop in the number of visitors in 2011 due to the instability in the Middle East.
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. Trade represents around 150% of the Lebanese GDP (average 2008-2009).
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.
The trade balance is structurally in deficit, despite a surplus balance of services. The trade balance (1,106 milions USD) has shrunk by 22% in 2011 compared to 2010, with exports rising by 17% and imports falling by 16%.
© Export Entreprises SA, all rights reserved.
Last updates: May 2012
