Lebanon's economy in better health than feared
Lebanon’s economy performed poorly in the first three quarters of 2012, but the year should still end with positive growth, according to Bank Audi’s quarterly Economic Report.
Despite economic indicators reporting a net contraction in value or a reduction in growth rates in the second and third quarter, the report said 2012 is still expected to close on two per cent growth, in line with International Monetary Fund projections.
“The third quarter has witnessed a downturn in the domestic security situation following a series of kidnappings in Lebanese territory,” Bank Audi’s report said. “Though it ended on an improved note after the release of hostages and the pope’s visit to Lebanon, the summer touristic season was severely damaged.”
Real estate sales transactions have contracted, the report added, but prices have remained largely stable.
Prices remained flat within the context of structural factors related to the low speculation and scarcity of land, the report noted.
The construction sector was also sluggish as new permits and cement deliveries contracted 14.3 percent and 7.9 percent respectively, it said.
The political uncertainties that prevailed throughout much of the year have affected the trade and services sector, leading to a net contraction for some of its components and a slow growth for others.
Trade did not perform any better. “A widening of 13.9 percent in the trade deficit over the first nine months of this year added to a similar expansion last year,” Bank Audi’s quarterly report said.
“Imports actually grew by 11.3 percent over the first nine months of 2012, while exports rose by a mere 2.2 percent, mainly due to the contraction in land exports amid the escalation of security concerns in Syria.”
With inflows unable to fully offset the country’s trade deficit, further pressure was reported on the balance of payments that recorded a deficit of $1.9 billion in the first nine months of 2012, after around $ 2 billion deficit in full-year 2011.
Lebanese banks witnessed slower growth over the first nine months of 2012, amid operating conditions characterized by tight interest margins and downward pressure on fee income.
“Banks’ total activity, measured by the aggregated domestic assets of Lebanese banks, grew by 5.5 percent in first nine months of 2012 to reach $148.4 billion at the end of September 2012, the equivalent of 350 percent of Lebanon’s GDP,” the report added.