Grading business sectors

A number of economic sectors are faring well despite the challenges and the recent unfavorable credit ratings applied by international rating agencies. These resilient sectors are weathering the storm while the future remains promising for other sectors. Fitch Ratings has downgraded Lebanon’s long-term foreign-currency issuer default rating to ‘CCC’ from ‘B-’. Another credit rating agency, S&P Global Ratings, said it affirms the country’s ‘B-/B’ long- and short-term sovereign credit ratings. S&P said that Lebanon’s outlook remains negative. Last January, Moody’s downgraded Lebanon’s rating to Caa1 (for details see page 30). Lebanon Opportunities, based on its extensive reporting, has issued its own grading for the economy, fiscal performance, and various business sectors. The aim of this assessment is to identify areas of strength and weakness and to provide a forecast of performance in the near future.

RATING GUIDE

Excellent

Positive trend

Neutral

Negative trend

Very negative

The Economy

The economy has recorded zero percent, or only slight growth in the first half of 2019, but the second half of the year is expected to show marginal growth to end the year around the zero growth mark. The country has already prepared a national economic plan with the assistance of McKinsey & Company. It also secured pledges at the CEDRE donor conference for more than $11 billion of concessionary loans and grants to finance infrastructure projects. Foreign direct investment (FDI) inflows are expected to have jumped 14 percent last year, while expatriate remittances are estimated to have grown by 1.8 percent. The opening of land export routes to Syria and the relative improvement of the security situation there compared with previous years will continue to have a positive impact on exports and tourist arrivals (by land). The weakening of the Syrian risk with regard to Lebanon will encourage further growth in FDI inflows. In the longer run, participation in the reconstruction of Syria will provide many opportunities for the local private sector among construction companies, cement producers,