UN projects GDP growth
reaching 1.7 percent in 2024

Report estimates flat performance in 2023

GDP is forecast to grow by 1.7 percent in 2024 and by 3.8 percent next year, according to the ‘World Economic Situation and Prospects 2024’ report released by the United Nations Department of Economic and Social Affairs (UN DESA).

“GDP is estimated to have shrunk slightly (by around 0.2 percent) in 2023 despite the strong revival of tourism and the inflow of remittances, which supported domestic consumption. The country continues to suffer from a lack of basic services, the deterioration of infrastructure, the prevalence of multiple exchange rates, and institutional weaknesses,” UN DESA said.


Source: UN DESA
* Partly estimated
** Baseline scenario forecasts, based in part on UN DESA’s World Economic Forecasting Model

According to the UN report, inflation, which reached 230 percent in 2023, is projected to drop to 78 percent in 2024, and 30.7 percent in 2025 amid sharp exchange rate depreciation.

Marwan Barakat, Group Chief Economist and Head of Research at Bank Audi, said that according to his base case scenario, which has a probability of realization of around 50 percent, real GDP growth is expected to be close to nil in 2024 with the inflation rate nearing 100 percent. “Additionally, a tiny decrease in BDL’s reserves is expected along with a slight deficit in the balance of payments,” he said.

According to Barakat, this middle scenario assumes that internal political breakthroughs that would lead to economic reforms will not be achieved while the conflict in the South will remain though it will be confined with the rules of engagement maintained to a large extent.

The positive scenario, which has a probability of realization of around 25 percent, depends on the end of the war shortly, imminent election of a President, formation of an effective and efficient government, start of the implementation of reforms, reaching a final agreement with the IMF, and the materialization of international assistance. “If these conditions are met, we expect real GDP growth rate to exceed seven percent, the inflation rate to decline considerably, the exchange rate to stabilize at below LL90,000, BDL’s reserves to strengthen, and a surplus in the balance of payments to be recorded for no less than $5 billion,” Barakat said.