Observers: Lebanon economy to continue growth after election
With a strong and conservative banking system, a shrinking public debt, and a rising international credit rating, the Lebanese economy continues to thrive as the country holds parliamentary elections. Lebanon projects its budget deficit for 2009 to be $4 billion, a mere 12.3 percent of its GDP, while the public debt remains high $47 billion, say 162% of the GDP. However, two years ago the debt ratio amounted to 180% of the GDP.
A total of 87 percent of bank deposits are backed by private investors and could increase an additional 13 percent by the end of this year following a 15 percent increase last year.
The Lebanese economy was the only one in all of Europe, the Middle East and Africa to have its local and foreign currency bond ratings increase since September 2008. Moody's raised the rating to B2 this April thanks to a strong resilience of public finances and the management of government fiscal deficits by its thriving private banking system.
The International Monetary Fund says Lebanon "has so far shown remarkable resilience in the face of the unfolding global financial crisis" thanks to current interest rates that support the increasing inflows of international deposits and build up of international reserves. The World Bank reports that deposit inflows increased 3.7 percent from last August to January.
International market analysts do not expect the economy's growth to slow in the short to medium term following the June 7 elections, regardless of who wins the majority of the Lebanese Parliament. According to some experts, only a constitutional deadlock caused by an extremely close election could negatively affect the Lebanese economy and foreign investors, but the strong banking system should be strong enough to safeguard against a significant downturn in the short term.
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