I GDP and remittances may resume growth
I Gold is still intact
I Maritime border deal opens doors
The economy is timidly showing signs of reaching bottom and getting ready to a turnaround despite a lingering political stalemate and lack of reform and government initiative. GDP and remittance inflows are likely to witness some recovery while the maritime border agreement will have a positive impact on the country’s credit profile and external position. International assistance to the private sector continues while the government remains exceedingly lethargic in implementing the reforms required to secure the long-awaited basic support to exit the crisis.
Better-than expected GDP data
Economic indicators are showing some improvements although compared to a low base in 2020. The Central Bank (BDL) expects Lebanon to achieve economic growth of about two percent in 2022. Conversely, the World Bank said in its Lebanon Economic Monitor (LEM) for the fall of 2022: “Real GDP is projected to contract by a further 5.4 percent in 2022 assuming continued political paralysis and no implementation of a recovery strategy.” The World Bank, however, revised upward its estimated contraction in real GDP for 2021 to seven percent from 10.4 percent as in its latest report thanks to better-than expected data. It said in the LEM report: “While tourist arrivals have risen by 132 percent year-to-year in 2021, up from a Covid-induced low base, the recovery has not been sufficient to compensate for the persistent increase in the current account deficit and the substantive drop in private consumption.” According to the report’s estimates, the four-year GDP contraction (through 2021) has erased 15 years of previous economic growth. The bank has kept its estimate of GDP contraction for 2020 at 21.4 percent.
