The World Bank forecasts 1.5 percent GDP growth

Despite a brief mid-year improvement in tourism and commercial activity, the World Bank said that the Lebanese economy is not expected to grow by more than 1.5 percent in 2014.

“This is higher than the 0.9 percent growth expected last year,” said Wissam Harake, Economist at the World Bank-Lebanon. “Lebanon is still facing the same economic and political conditions currently, but a slight increase in the security situation, until recent bad incidents, and the resurgence of the tourism sector especially with the lift of ban on Arab tourists, were behind the increase of growth prospects this year,” he said.

According to the World Bank’s MENA Economic Monitor, the intensification of the civil war in Syria and the continued influx of refugees have adversely affected they country’s economy.

The central government’s overall fiscal deficit is forecast to widen to 10.2 percent of the Gross Domestic Product (GDP) in 2014, compared to 9.4 percent last year.

Lebanon’s primary balance in 2014 will register a deficit for the third consecutive year, increasing by a projected 0.7 percentage points to 1.2 percent of GDP. As a result, gross public debt will rise to a forecasted 149 percent of GDP in 2014, compared to 143.1 percent of GDP at the end of 2013, the report said.

“The growth slowdown and the decrease in government revenues after the start of the Syrian conflict are translated into larger fiscal deficit and higher public debt,” said Harake.
The current account deficit is forecasted to reach 8.3 percent of GDP in 2014, in line with the previous two years.
However, the report said that in order to meet its balance of payments, Lebanon must remain dependent on capital inflows, which continue to be robust, supported by remittances and international aid for refugees.

The banking sector remains stable as does the currency, the report said. The internal political paralysis and spillovers from the Syrian conflict will continue be a drag on growth, which is expected to remain below potential, for the near term. The GDP is expected to grow by two percent in 2015, according to the World Bank report.