IMF publishes report into Lebanese economy
The IMF, which released a 12-page report analyzing the performance of the Lebanese economy from 1997 to 2010, noticed that growth strengthened after a decade of lackluster performance (averaging 2.5 percent per year from 1998-2006) due to economic and political crises as well as armed conflict.
"During 2010, growth was concentrated in construction, and financial and health services. In contrast, growth in retail and wholesale trade was negative for the first time in three years," the report said.
"From the demand side, growth in 2010 was mostly private sector driven (consumption and investment), with a positive contribution from net exports for the first time in three years."
It added that total disposable income by far exceeded domestic income. It reached close to 135 percent of GDP in 2010, mainly as a result of the sizable private transfers received from the significant Lebanese diaspora.
"During the past 13 years, growth averaged about 4 percent. This growth was characterized by high volatility and does not compare favorably with the average growth of comparator groups."
It noted that growth in 2010 was heavily concentrated in the construction sector and financial services.
This reflected a real estate boom and a record growth of the banking sector with a combined contribution of more than half of the 7-percent growth.
The other half came from smaller but dynamic sectors: health services' reflecting Lebanon's growing importance as a regional health hub; manufacturing mainly nonmetallic ores, textiles, metals and machinery and agro-food, almost all of which picked up after last yearâ€™s slowdown; government spending on transport and communication; manufactured goods and financial services; transport and communication, and hotels and restaurants.
"Overall services contributed about 60 percent to growth, followed by construction and government spending at almost 20 percent. Among services, the largest contributors were trade, transport and communication, and financial services.
It added that other contributing sectors were health, education (the opening of private schools and universities), business services, hotels and restaurants (development of tourism, particularly from the GCC), and manufacturing, mainly textiles, nonmetallic ores and furniture.
"Agriculture showed a minor contribution while energy and water recorded a negative one (reflecting technical inefficiencies and below cost-recovery tariffs)" the IMF said.
"Private consumption has been driving growth in 2010. Consumption of tobacco and alcohol, chemicals and pharmaceuticals, leisure and education increased significantly in 2010. Net exports contributed positively for the first time in four years, on account of the large positive contribution of exports particularly agricultural exports, beverages, and metals, machines and equipment."