Lebanon could see its import bill decline if the euro and yuan currencies continue to depreciate due to the volatile markets, economists said Wednesday.
“The depreciation of the Chinese currency is positive for us because around 12 percent of our imports come from China and this means the prices of commodities coming from this country should drop,” Nassib Ghobril, the head of economic research at Byblos Bank, told The Daily Star.
Chinese exports to Lebanon in the first six months of 2015 reached $1.03 billion, or 11.6 percent of the market share.
Ghobril said Lebanon could import more in the same amount it used to pay before the Chinese currency fell.
Nearly all global stocks incurred heavy losses in the past four days after the economic data in China showed a fall in GDP projection.
China’s turbulent stock markets slipped again Wednesday as a double-barreled blast of central bank stimulus failed to convince investors of Beijing’s ability to jolt the world’s second-biggest economy out of its economic slowdown.
Experts say the Lebanese stock market was not affected by the turmoil in the international markets, noting that Lebanese investments in foreign equity and shares are quite small and even insignificant.
Ghobril said Lebanese investments in the Chinese market hardly reach $110 million.
He added that the fall in the Chinese currency will also lead to a decline in shipping cost and insurance premiums.
But it remains to be seen whether suppliers and merchants will slash the prices of the imported commodities for the consumers accordingly.
Chinese exports to Lebanon mainly consist of electronics, cellphones, cars, machines and garments.
The depreciation of the euro currency against the US dollar has also reduced Lebanon’s import bill.
Around 40 percent of Lebanon’s imports come from the EU.
The depreciation of the euro and Chinese currency should in principle reduce the trade deficit this year provided that Lebanon’s exports improve, according to experts.
Economist Ghazi Wazni said the negative repercussion of the volatile Chinese market on the global economy in general would be temporary.
“Lebanon will be affected by the drop in the US dollar because its economy is dollarized and it will certainly be affected positively by the drop in the prices of oil,” he added.
Wazni said the Lebanese economy would remain immune to the fallout from the global financial crisis.
“The crisis will mainly have a negative impact on the emerging markets that directly deal with China, and more precisely with Asian countries like Malaysia,” he added.
But Wazni noted that domestic problems like the protests and sit-ins over the past five days have a more devastating impact on the Lebanese economy than the turmoil in the global markets.
“Tourism and trade will surely be affected by the riots that took place in downtown. The TV footage of riots and demonstrations will not encourage tourists to come to Lebanon.”
Central Bank Governor Riad Salameh has prohibited Lebanese commercial banks from making any investments in high-risk tools and stocks in order to protect customers’ depositors, a policy that has saved Lebanon from financial crises.
By Osama Habib
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