Lebanon Economic Forecast

Lebanon Economic Outlook

May 12, 2020

The economy is crumbling, with the private-sector PMI falling to a record low in April amid lower output and new orders. The lockdown, which has been extended until 24 May, is hampering domestic activity even though some restrictions have now been lifted, while a recent flare-up of protests is further hurting confidence and political stability. Currency chaos is inflicting further damage: While the pound is still pegged to the dollar at LBP 1,507.5 per USD for essential imports, the parallel rate has plummeted in the last few months, crushing local purchasing power. Moreover, the Central Bank has been limiting access to dollars as parts of gradual efforts to dismantle the peg, generating further uncertainty. In politics, at end-April the government published a rescue plan and announced it was aiming for an IMF bailout, which will be vital to restore economic and financial stability.

Lebanon Economic Growth

The economy is set to contract sharply this year, with the fallout from Covid-19 compounding a dismal underlying economic picture of financial and currency instability, and crippling public debt. A worsening of the viral outbreak, potential further social unrest and uncertainty over the government’s commitment to reform pose downside risks to the outlook. Our panelists see the economy contracting 8.4% in 2020, which is down 2.3 percentage points from last month’s forecast, before expanding 0.1% in 2021.

Lebanon Economy Data

2014 2015 2016 2017 2018
Population (million)5.65.96.06.16.1
GDP per capita (USD)8,6208,5418,5308,7799,294
GDP (USD bn)48.350.051.253.456.6
Economic Growth (GDP, annual variation in %)1.90.41.60.60.2
Unemployment Rate6.36.26.36.16.2
Fiscal Balance (% of GDP)-6.4-7.9-9.6-7.0-11.0
Public Debt (% of GDP)138141146149151
Inflation Rate (CPI, annual variation in %, eop)-0.7-3.43.15.04.0
Inflation Rate (CPI, annual variation in %)1.9-3.7-0.84.56.1
Exchange Rate (vs USD)1,5101,5081,5081,5101,512
Current Account (% of GDP)-24.0-17.1-20.4-22.7-23.6
Trade Balance (USD billion)-15.0-13.6-14.0-14.4-15.1
Exports (USD billion)4.64.03.94.03.8
Imports (USD billion)19.617.617.918.418.9
Exports (annual variation in %)-12.1-12.5-1.22.5-4.8
Imports (annual variation in %)-4.5-14.12.12.82.5
International Reserves (USD)39.538.843.343.540.6
External Debt (% of GDP)133135138139140

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Lebanon Facts

Value Change Date
Exchange Rate1,5130.0 %Dec 31

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