Lebanon flag Lebanon: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After years of neglect, corruption, financial mismanagement and the war next door in Syria, the Lebanese economy spilled over into a full-blown crisis in October 2019, sparking mass protests that demanded sweeping reforms. The economic crisis deteriorated further since, due to the COVID-19 pandemic, rising public debt, a USD 1.2 billion Eurobond sovereign default, a currency collapse and an explosion at the port of Beirut. The traditional engines of growth in Lebanon (real estate, construction and tourism) have stalled and the banking sector, which until now has been praised for its resilience, has collapsed. According to the latest IMF data, GDP contracted by -25% in 2020. Euler Hermes expects the recession to continue in 2022, and real GDP not to return to the pre-recession level of 2017 before 2030. The Economist Intelligence Unit also expects Lebanon's economy to contract further in 2022, as private consumption is hit and coronavirus-related issues exacerbate the economic, currency, financial and debt crises. Inversely, Focus Economics forecasts a return to positive growth in 2022 (2.5%), mainly due to a favourable base effect following four straight years of recession. Among the downside risks are high inflation, dysfunctional politics, social unrest, tensions with the Gulf and the failure to undertake reforms (Focus Economics).

In 2021, Lebanon’s unprecedented crisis further deteriorated as a political deadlock prevented any reform to be implemented. The economy contracted by about 30% since 2017, the Lebanese lira lost around 90% of its value, and food prices have increased almost ten-fold since May 2019 (IMF). Social unrest and Saudi Arabia’s ban on Lebanese imports in October further darkened the situation. Public debt was estimated at 150.4% GDP in 2020, according to IMF latest figures. Lebanon is the third most indebted country in the world, after Japan and Greece. The budget deficit reached -4.8% of GDP in 2020. High public debt and a persistent overall deficit limited government action during economic downturns and following the Covid-19 crisis. The current account deficit was recorded at -17.8% of GDP in 2020. Inflation soared to nearly 85% in 2020 and is forecast by Euler Hermes at around 135% in 2021 and 50% in 2022. In November 2021, the year on year general inflation rate exceeded 200%, the highest level ever recorded in the country (FAO). The formation of a new government in September 2021 provided the opportunity to restart negotiations with the IMF. Lebanon is seeking tens of billions of dollars in aid from donor nations and the Fund, but getting this aid requires the implementation of long-overdue reforms. As pointed out by the IMF, Lebanon needs assistance to overcome its deep humanitarian, social, and economic crisis and to implement reforms to bring public finances into order, restructure public debt, rehabilitate the banking system, expand the social safety net, reform state-owned enterprises, and improve governance.

The country faces many humanitarian and social issues in addition to macroeconomic and politic challenges. The massive influx of Syrian refugees (25% of the country's population) has shaken the countries demographic balance, labour market, and is putting pressure on the costs of rent, infrastructure and supply of public services (water and electricity). The 'waste crisis', which begun in 2015, is yet to be resolved as garbage continues to pile up along the Mediterranean Sea. Unemployment has skyrocketed following the inflow of Syrian refugees, which are competing with Lebanese workers in the informal sector and could hit over a quarter of the workforce. According to the World Bank, 60% of the country's young people are not in employment, education or training. Over 70% of refugees live under the poverty line. The country faces significant social inequalities.

 
Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 52.37e19.01e0.000.000.00
GDP (Constant Prices, Annual % Change) -7.3e-25.0e0.00.00.0
GDP per Capita (USD) 7,639e2,785e000
General Government Balance (in % of GDP) -18.0-4.8e0.00.00.0
General Government Gross Debt (in % of GDP) 171.1150.4e0.00.00.0
Inflation Rate (%) 2.984.90.00.00.0
Current Account (billions USD) -14.44-3.38e0.000.000.00
Current Account (in % of GDP) -27.6e-17.8e0.00.00.0

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Lebanese Pound (LBP) - Average Annual Exchange Rate For 1 ZAR 102.48113.34113.73104.69215.79

Source: World Bank, 2015

 

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Latest Update: June 2022