GDP at $75 billion in 2021
$120 billion with oil and gas

Economy running at 25 percent inefficiency

The Gross Domestic Product (GDP) at current growth rate will reach $75 billion by 2021. If oil and gas exploration and production go forward, it will surpass $120 billion, according to Freddie Baz, Group Chief Financial Officer at Bank Audi.

The oil and gas industry will have a major impact on energy supply, reducing therefore the country’s dependency on outside energy resources, which will solve the country’s energy crisis, pay down a large amount of the public debt and lead to further growth of the GDP.

Baz said that the four to five proved blocks of gas reserves have a potential ranging between 12 and 16 trillion cubic feet, while energy consumption in gas equivalent for Lebanon is estimated to reach 0.06 trillion cubic feet by 2021. “This means that one block of gas can serve 80 to 90 years worth of energy consumption,” he said.

GDP should have been higher than its current level of $50 billion and could be at $200 billion had the Civil War not taken place from 1975 to1990, said Baz. The Capacity utilization rate, which is the potential output level being used, is currently at 75 percent, i.e. with a 25 percent gap in output.

“The Civil War and physical related damages have had a major impact on the deterioration of the GDP,” said Baz. “That’s why oil and gas resources would be very important to regain the momentum of our GDP,” he said.

The economic opportunity loss in GDP has been estimated by Baz at $12 billion per year: “GDP should have been at $62 billion,” he said.

“To close the output gap, we need to improve our political and economic governance,” said Baz. “We don’t need policies and visions as much as we need reforms in infrastructure, investment incentives, and support of exports, mainly for small and medium industries, among other measures,” said Baz.