The World Bank revised its GDP growth estimate for Lebanon to just 0.2 percent from 1 percent in 2018, reflecting a deceleration in economic activity linked to policy-based tightening of liquidity. “The latter includes a halt in subsidized lending by the Central Bank, the Banque du Liban, that was being channeled via commercial banks to the real estate sector, providing a rare source of growth impetus since 2012, as per the World Bank.
Moreover, tourist arrivals rose by 5.8 percent in 2018, almost half of the 2017 rate, while real estate indicators pointed to a contraction in the sector,” Bank Audi’s Lebanon Weekly Monitor, which carried the World Bank report, said.
Cement deliveries decreased by 5.3 percent year-on-year in the first eleven months of 2018, it added.
“The fiscal position deteriorated sharply in 2018 with the fiscal deficit reaching 11.5 percent of GDP.
“This is despite Lebanon’s commitment in the [Paris] CEDRE donor conference in April 2018 to an annual 1 percentage point decline in the deficit-to-GDP ratio over a five-year period for a total reduction of 5 percentage points in five years, as per the World Bank,” the report said.
The report said the external sector was a net positive for GDP, driven by a 13.6 percent decline in merchandise imports that induced a 16 percent narrowing in the trade in goods deficit.
“Whereas private consumption has traditionally led real GDP growth, net exports are estimated to be the main driver in 2018.
“Structurally, the economy remains heavily based on real estate, retail and financial services, and oriented towards the region, rendering it vulnerable to volatility in growth and sizable macroeconomic imbalances, as per the World Bank,” the report said.
It added that despite the improved trade in goods balance, the net foreign asset position accumulated a loss of $4.823 billion in 2018, compared to a loss of $156 million in 2017.
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