Lebanon's economy finally coping with Syrian crisis
Currency, interest rates and deposits showing signs of stability, according to central bank Governor Riad Salameh (image: on file).
Lebanon’s economy is coping with fallout from the four-year war in neighbouring Syria, with the currency, interest rates and deposits showing signs of stability, according to central bank Governor Riad Salameh.
Gross domestic product grew 2 per cent last year and the first quarter showed a similar trend, Salameh said in an interview at his office in Beirut on Tuesday. Though way below the average 8 per cent a year between 2007 and 2010, “we’re not in a crisis,” he said.
“The economy is not bad and you could see that the indicators that we follow as a central bank show that confidence is still here,” Salameh said. “If you look back, we have shown resilience and Lebanon’s economic and monetary stability has been tested on many occasions in very stressful situations.”
An influx of refugees who now make up more than a quarter of the population strained Lebanon’s resources and flooded the market with cheaper labour. Tourists have stayed away because of the violence, reducing revenue from wealthy Gulf visitors. Political bickering has paralysed government institutions and left the country without a president since May.
Even with the setbacks, the Lebanese pound has remained stable, pegged to the dollar at about 1,500 since 1993, deposits are still increasing about 6 per cent year-on-year and interest rates are expected to stay unchanged this year, Salameh said.
Foreign reserves are at a historic high of $38 billion while debt-to-GDP is at 142 per cent, a rate that will go down with increased growth, Salameh said. In February, Lebanon sold $800 million of 10-year bonds and $1.4 billion of 15-year bonds, tapping a drop in borrowing costs for emerging market.
“The availability of funds is here whenever there is a drive to expand the economy,” said Salameh. “The political and security issues are the issues that are influencing the psychology of the investor and the consumer.”
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