Lebanon Economic Forecast

Lebanon Economic Outlook

July 7, 2020

The country is sinking deeper into an economic abyss, as Covid-19 compounds the financial and currency crises. The private-sector PMI languished deep in contractionary territory throughout Q2 amid lower output and new orders. In addition, the Lebanese pound remains in freefall on the black market. This has led to skyrocketing inflation, which hit 56.5% in May, eroding consumers’ purchasing power. Amid surging inflation and unemployment, social unrest reignited over the last month, generating further uncertainty. While the easing of lockdown measures—the country’s only international airport reopened from 1 July—should provide some respite to the battered economy, external support will be vital to restoring economic stability. In this regard, recent developments are discouraging: The IMF suspended talks over a USD 10 billion bailout package in early July due to political infighting on the Lebanese side.

Lebanon Economic Growth

Activity is set to plummet this year, due to the fallout from Covid-19, spiraling inflation, social unrest and weak sentiment. A worsening of the viral outbreak, potential further social unrest, and uncertainty over the government’s commitment to reform and ability to secure external funding pose downside risks to the outlook. Our panelists see the economy contracting 13.0% in 2020, which is down 2.2 percentage points from last month’s forecast, before declining 2.2% in 2021.

Lebanon Economy Data

2015 2016 2017 2018 2019
Population (million)5.96.06.16.16.1
GDP per capita (USD)8,5418,5308,7799,2948,803
GDP (USD bn)50.051.253.456.653.4
Economic Growth (GDP, annual variation in %)0.41.60.9-1.9-5.6
Unemployment Rate6.26.36.16.26.2
Fiscal Balance (% of GDP)-7.9-9.6-7.0-11.0-10.9
Public Debt (% of GDP)141146150155171
Inflation Rate (CPI, annual variation in %, eop)-3.43.15.04.07.0
Inflation Rate (CPI, annual variation in %)-3.7-0.84.46.12.9
Exchange Rate (vs USD)1,5081,5081,5101,5121,509
Current Account (% of GDP)-17.1-20.4-22.7-23.6-  
Trade Balance (USD billion)-13.6-14.0-14.4-15.1-  
Exports (USD billion)4.03.94.03.8-  
Imports (USD billion)17.617.918.418.9-  
Exports (annual variation in %)-12.5-1.22.5-4.8-  
Imports (annual variation in %)-14.12.12.82.5-  
International Reserves (USD)38.843.343.540.638.2
External Debt (% of GDP)135138139140-  

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Lebanon Facts

Value Change Date
Exchange Rate1,5130.0 %Dec 31

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