Economy slows, Public finances improve in first half

Fransabank’s half year report said economic growth hit by local and regional conflicts

The economy recorded a general slowdown in activity in the first half of 2012 compared to the same period last year, according to Fransabank’s half year economic bulletin published on August 26.

Such performance resulted from local as well as regional conflicts. ESCWA forecast GDP growth for 2012 at 2.5 percent, Merrill Lynch pegged growth at three percent.
Most indicators of the real sector reported a significant decline. The number of tourists declined by around eight percent year-on-year, and the number of ships using the Port of Beirut fell by seven percent. The number of loans granted to SMEs was down by 11 percent.

The real estate indicators were not immune to the downhill trend with the number of construction permits and the number of property sales falling by 15 percent and eight percent respectively.
On teh other hand, public finances posted a slight improvement. Total government revenues for the first five months rose by 15 percent to $4.1 billion, while expenditures totaled $5.2 billion, up by ten percent. The fiscal deficit fell by around six percent, to $1.1 billion. Gross public debt was up by around five percent, to $55 billion at end-June.

The monetary situation remained relatively stable, the report said. The inflation rate was at three percent compared to six percent one year earlier. Foreign assets at the Central Bank rose by 17 percent to $35 billion. The banking sector continued to register growth with total assets rising by 7.6 percent, to around $146 billion. Private sector deposits were up by 7.5 percent to around $120 billion. Loans to the private sector rose by 12 percent to $41 billion. Total trading volume at the Beirut Stock Exchange reached around 30 million shares, down by 44 percent y-o-y. The market capitalization decreased by nine percent, to $8.8 billion.

The trade deficit rose by 22 percent to $8.7 billion, while the value of net capital inflows rose to $ 7.7 billion, up by 16 percent. The balance of payments recorded a deficit of $1 billion, doubling from $470 million a year ago.

Reported by Hanadi Chami