World Bank critical of Lebanon’ model and economic growth

While most Lebanese economic experts agree that the economy is in dire condition as a result of regional instability and other associated risks, the World Bank (WB) has shown a slight growth in the rate of real economy at 1.8% in 2016 compared to 1.5% in 2015 and anticipated a 2.3% rise next year and another 2.5% in 2018. The WB report published last week entitled ‘A Geo-Economy of Risks and Rewards’ traced the anticipated growth to a gradual recovery in the tourism sector, while noting that the socio-economic model of Lebanon is now broke. Lebanon’s large dependence on foreign remittances from its diaspora to finance internal and external imbalances, exposes the country to economic and political conditions beyond its control, the report said. Moreover, the report went on to say, the primary cause of threat to economy is the possible expulsion of Lebanese workers from Arab Gulf countries. While it made clear that Lebanon has benefited from the fall in the global prices of fuel and the consequent decrease in government subsidies to the Electricity of Lebanon Company during 2015, however, the country’s public finance system did not improve. The WB also indicated a drop of 5.4% in 2015 in foreign currency reserves at Bank of Lebanon due to slow foreign capital inflows. The anticipated future economic growth remains weak amidst political turmoil locally and in the region as a result of the Syrian war, the report revealed, warning of additional drop in the remittances of Lebanese expatriates from the Gulf which is expected to witness a decline in financial reserves and a contraction in expenditure due to falling oil prices. In conclusion, the World Bank report offered one long term solution which resides in industry and technology sectors taking the lead towards recovery. 

In the same vein, economic expert, Ghazi Wazni told An Nahar newspaper that the national economy is still standing despite stagnation. This, he said, is mainly attributed to the security situation which is still under control; high level of financial transfers from expatriates and the banking sector which continues to generate acceptable growth rates. Wazni however, did not hide his fears of a decline in the majority of economic indexes in 2016, anticipating a growth by less than 1% because of continuing damages to themain economic sectors. For his part economist, Elie Ya7shushsi raised the alarm on the state of the economy and called fro urgent government measures.

For the full World Bank report please check: http://documents.worldbank.org/curated/en/2016/06/26412099/lebanon-economic-monitor-geo-economy-risks-reward