Exporters not affected by Syria’s war

Increase of exports by $125,000 per firm

The Syrian war did not affect Lebanese merchandise and services exports at the aggregated level, according to the ‘Impact of the Syrian conflict on Lebanese Trade’ report published by the World Bank yesterday.

“Exports from Lebanon to Syria have been more resilient to the war than neighboring countries exporting to that country like Jordan and Turkey,” said Massimiliano Calì, Trade Economist at the World Bank.

Exports have dropped since 2012, but the report’s analysis suggests that negative performance seems unrelated to the Syrian war.

“This decline in exports of the recent years has been mainly driven by a decrease in the exports of pearls, precious stones, and other metals, which are subject to fluctuation in international demand,” said Calì, who unveiled the report’s findings during a presentation held yesterday at Crown Plaza Hotel in Beirut.

The report noted that the Syrian war has generated opportunities for exporters. Many firms that were not exporting to Syria in 2010 started exporting there by 2012. On average, exports to Syria increased by $125,000 per firm, relative to the exports of the same firm to other destinations, and relative to the exports of the other exporters once netting out the drop in Syrian exports for the original exporters in 2010.

The Syrian war has not affected all merchandise sectors equally, the report said. “There were positive increases in the exports of beverages and tobacco sector, while a negative impact has been felt by exporters of manufactured goods and of mineral fuels,” said Calì.

“Exporters using Syria as a transit country have been affected negatively by the Syrian war”, said Calì. On average, a firm that was exporting to the affected countries in 2010 experienced by 2012 a drop of $68,000 in its exports to these countries relative to the other exports of the same firm as well as to the other exports of firms that were not exporting to Syria in 2010.

The data quality did not allow a unified assessment of the effects of the Syrian war on the services trade, the report said. Exports of services declined dramatically in 2012 and 2013, according to the Central Bank data. The opposite is true according to UNCTAD data, while the International Monetary Fund recorded a flat trend. Services exports include transport, tourism, as well as modern sectors like financial, real estate, and business services.

“Tourism has been badly hit, but non tourism-services like real estate and financial services have rebounded in 2013,” said Calì. “Other business services including legal, accounting, engineering, architecture, advertising, and media services, continued to be resilient,” he said.

Imports to Lebanon have been stable, the report said. They continued to grow through 2013 with a small drop estimated for 2014. However, the drop in Syrian production has led to a decline in imports from Syria. “Refugee inflow to Lebanon has pushed imports upward due to the increased demand for consumption and capital goods,” said Calì. “The increased trade costs due to the war have hampered the ability of Lebanese traders to import via land, thus decreasing imports,” he said.

Calì noted “a redirection of both exports and imports away from Masnaa and Abboudieh especially between 2012 and 2013.” He said that “the main beneficiary of this re-direction has been the Port of Beirut (PoB).” The share of PoB in total export values jumped to 44 percent in 2014 from 28 percent in 2012, while the share of imports rose to 71 percent from 66 percent for the same period.

Refugee inflow has also had a positive impact on trade. “Syrian relocation included the rich and elite who have high spending power, while poor refugees also consume basic consumption goods,” said Calì. “International aid and remittances to refugees help also boost the balance of payment,” he said.