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publication December 1, 2020

Lebanon Economic Monitor, Fall 2020 : The Deliberate Depression


Lebanon is in a deliberate depression with unprecedented consequences for its human capital, stability, and prosperity. 

For almost a year, Lebanon’s macroeconomy has been assailed by compounded crises, beginning with an economic and financial crisis, followed by COVID-19 and lastly the explosion at the Port of Beirut. By October 2019, the economy plunged into a financial crisis brought about by a sudden stop in capital inflows, which precipitated systemic failures across banking, debt and the exchange rate.

Of the three crises, the economic crisis has by far had the largest (and the most persistent) negative impact. Exchange market pressures stifle trade and corporate finance in the highly dollarized economy, constraining the importation of capital and final goods, and inducing disruptions all along the supply chain. 

Real GDP growth is projected to sharply decelerate to –19.2 percent in 2020, on the back of a –6.7 percent contraction in 2019. The LEM Special Focus presents one approach to designing a comprehensive reform agenda aimed at addressing the root causes of the economic crisis.