Lebanon Economic Forecast

Lebanon Economic Outlook

October 6, 2020

The economy is in ruins, pummeled by the combination of the currency crisis, Covid-19, and heightened political and social instability. Moreover, the Beirut port explosion on 4 August has caused billions of dollars of damage and left hundreds of thousands homeless, dealing a further blow to activity. In August, the private sector PMI plummeted on faster declines in output and new orders, while inflation continued to surge due to the collapse of the pound in the parallel currency market, further eroding consumers’ purchasing power. The country’s political class has yet to provide a decisive response to the unfurling disaster, and in late September PM-designate Mustapha Adib gave up trying to form a government due to a lack of agreement over who would run the finance ministry. This bodes poorly for prospects of a near-term deal with the IMF, which is crucial to restoring stability.

Lebanon Economic Growth

Activity is set to plummet this year due to the fallout from the blast, Covid-19, spiraling inflation, social unrest and weak sentiment, and our panelists see a further decline in 2021. A worsening of the viral outbreak, potential further social unrest and doubts over the government’s commitment to reform and ability to secure external funding pose downside risks. Our panelists see the economy contracting 20.0% in 2020, before declining 1.9% in 2021, which is up 1.5 percentage points from last month’s forecast. However, this upward revision is due to a more supportive base effect, as panelists now see a much steeper decline in 2020.

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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