Lebanon’s economy not weathering the storms
Fransabank’s Economic Bulletin for the first half of 2012 explains how local and regional conflicts are negatively affecting Lebanon’s growth. Fransabank has recently completed its economic bulletin for the first half of 2012, which included a report on the performance of the Lebanese economy during this period, and a study on "Electronic Crimes, Piracy and Related Economic Risks: Cases of some Arab countries."
The report noted that the Lebanese economy recorded a slowdown in its general activity in the first half of 2012, as compared to the same period of the last year. This was reflected by the significant decline in most indicators of the real sector. The construction permits decreased by 15.61 per cent in the first half of 2012 in relative to the same period in 2011. Likewise, the number of property sales decreased by 8.02 per cent, the number of tourists by 7.79 per cent, the number of ships via Beirut Port by 6.9 per cent and the number of SMEs loans by 11.4 per cent.
The report explained that public finances have slightly enhanced in the first five months of 2012, as compared to the same period of last year. Total government revenues increased by 15.17 per cent to $4.1 billion for the first five months of 2012; while government expenditures reached $5.24 billion, an increase of 9.85 per cent during the same period. As a result, the fiscal deficit decreased by 5.78 per cent to $1.14 billion.
The report indicated that gross public debt reached $55.1 billion at the end of June 2012, an increase of 4.91 per cent from the same period of 2011. Excluding the public sector's deposits at the Central Bank of Lebanon and commercial banks from the total public debt, the net public debt increased by 3.55 per cent to $47.2 billion.
The report emphasised that the monetary situation remained relatively stable, in light of the monetary stabilisation policy adopted by the Central Bank of Lebanon, and the increased demand on the Lebanese pound. The money supply (M3) expanded in the first half of 2012 to reach $94.92 billion, an increase of $3.12 billion from the same period of last year. Based on the data issued by the Central Administration of Statistics, the inflation rate was 3.1 per cent for the first six months of 2012 as compared to six per cent for the same period of last year. The Central Bank of Lebanon's FX assets increased by 17.35 per cent to reach $35.04 billion at the end of June 2012, as compared with $29.86 billion in the same period of 2011.
The report explained that the banking sector continued to register growth in the first half of 2012, as compared to the corresponding period of previous year. The total assets increased by 7.68 per cent at the end of June 2012, reaching $145.8 billion. The private sector's deposits increased by 7.53 per cent reaching $119.84 billion at end-June 2012. Total loans to the private sector increased by 11.92 per cent to $41.69 billion during the period under consideration.
The report pointed out that according to statistics of the Beirut Stock Exchange, total trading volume in the Beirut Stock Exchange reached 29.81 million shares in the first half of 2012 against 53.17 million shares for the same period of last year, a decrease of 43.93 per cent. The market capitalisation decreased by 9.4 per cent at the end of June 2012, to $8.86 billion.
As for the foreign sector, the report showed that based on the data of the Higher Council of Customs, the value of imports reached USD 10.90 billion in the first half of 2012, an increase of 18.22 per cent from the same period of last year. On the other hand, the value of exports reached $2.2 billion, an increase of 4.26 per cent during the period under discussion. As a result, the trade deficit increased by 22.36 per cent to $8.7 billion in the period under review. The report also noted that the value of net capital inflows to Lebanon amounted to $7.7 billion in the first half of 2012, an increase of 16.13 per cent from the same period of 2011. Balance of payments recorded a deficit of USD 1,021 million in the first half of 2012, as compared to a deficit of $479 million during the same period of last year.
The report pointed out that the Lebanese economy witnessed a decline in its overall activities, with expectations to achieve a real growth rate for the year 2012 of 2.5 per cent as per the ESCWA estimates, and three per cent as per Merrill Lynch estimates.