One of the key issues facing Lebanon is the economic and social impact of the Syrian crisis, now in its seventh year. According to government and independent sources, up to 1.5 million Syrians, about a quarter of the Lebanese population, have taken refuge in Lebanon since the conflict started in March 2011.
This has strained Lebanon’s public finances, service delivery, and the environment. The crisis is expected to worsen poverty incidence among Lebanese as well as widen income inequality. In particular, it is estimated that as a result of the Syrian crisis, some 200,000 additional Lebanese have been pushed into poverty, adding to the erstwhile 1 million poor. An additional 250,000 to 300,000 Lebanese citizens are estimated to have become unemployed, most of them unskilled youth.
Within this challenging environment, GDP growth in Lebanon in 2016 is estimated to have undergone a slight acceleration to reach an estimated 1.8 percent, compared to 1.3 percent in 2015. The acceleration was driven by an improvement in the real estate sector and an increased number of tourist arrivals. Nonetheless, economic activity remains well below potential, inhibited by decidedly volatile geopolitics and security conditions.
The deflationary trend has reversed in 2016, reaching -0.8 percent, compared to -3.7 percent in 2015. The fiscal deficit continued to widen in 2016 to reach 10 percent of GDP, primarily due to a growth in expenditures outpacing revenues. Public finances are structurally weak and worsening, and in urgent need of reforms. Public debt continued to rise (157.5% of GDP at end-2016), due to low growth and a relatively high cost of debt financing.
Last Updated: Apr 01, 2017