Lebanon Economic Forecast

Lebanon Economic Outlook

June 4, 2019

The economy remains in a feeble state so far this year. The PMI is stuck deep in contractionary territory; the coincident indicator, which measures economic activity, is subdued; while annual falls in building permits and cement sales suggest the construction sector remains in the doldrums. On the political front, the government announced a draft 2019 budget in late May, which must now be approved by Parliament. The budget aims to slash the gaping fiscal deficit to unlock USD 11 billion of donor funds. However, some difficult decisions were dodged—such as cutting public-sector pay—likely in a bid to avoid further public protests. Moreover, it is uncertain whether all measures will be implemented in full, or if the budget will convince skeptical markets of the government’s commitment to fiscal prudence.

Lebanon Economic Growth

The economy should pick up somewhat this year, supported by Central Bank stimulus measures. Moreover, the enactment of the 2019 budget could boost business confidence. However, growth will still be limp, weighed on by a tighter fiscal stance. Regional instability and elevated public debt pose downside risks. Our panelists expect the economy to grow 1.5% in 2019, which is down 0.1 percentage points from last month’s forecast, and 2.0% in 2020.

Lebanon Economy Data

20132014201520162017
Population (million)4.44.44.44.54.5
GDP per capita (USD)11,37111,80211,18811,293-  
GDP (USD bn)45.947.849.550.4-  
Economic Growth (GDP, annual variation in %)2.62.00.81.0-  
Unemployment Rate6.26.26.26.26.3
Fiscal Balance (% of GDP)-8.7-6.0-7.3-9.2-7.3
Public Debt (% of GDP)138139142151153
Inflation Rate (CPI, annual variation in %, eop)1.1-0.7-3.43.15.0
Inflation Rate (CPI, annual variation in %)4.81.9-3.8-0.84.5
Exchange Rate (vs USD)1,5081,5081,5081,5081,508
Current Account (% of GDP)-26.7-28.1-19.6-23.3-  
Trade Balance (USD billion)-15.3-17.5-15.0-15.4-15.9
Exports (USD billion)5.24.54.03.94.0
Imports (USD billion)20.522.119.019.419.9
Exports (annual variation in %)-7.9-12.2-12.5-1.32.4
Imports (annual variation in %)0.87.7-14.12.12.8
International Reserves (USD)36.739.538.843.343.5
External Debt (% of GDP)67.462.662.463.4-  

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Lebanon Facts

ValueChangeDate
Exchange Rate1,5080.0 %Jun 13
Stock Market8440.37 %Jun 13

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