Lebanon’s growth seen higher than Mena
Beirut, June 10, 2010
Lebanon’s economic growth will reach 5.6 per cent in 2010 and 5.3 per cent in 2011, above the forecast for Mena regional growth, which is expected to average 4.5 per cent in each year, said a global business leader.
The Economist Intelligence Unit, the business–to–business arm of The Economist Group, added that although this is below the growth seen in 2007-09, it is still well above the long-term average since the civil war.
Lebanon’s growth will be driven by robust demand its exports of goods and services, especially tourism, according to EIU.
But Lebanon’s growth potential is far higher, a statement by The Economist said. The country has strong human capital and many areas of the country are underdeveloped.
At present, growth is concentrated in a few services sectors based around Beirut. If sufficient financing and investment were made available, and if investors were confident enough, a wider range of economic sectors in different regions of the country could grow strongly.
One of the key constraints is the uncertainty about the long-term political situation, especially in the light of the political risks elsewhere in the region and the unresolved conflict with Israel, the statement added.
The country’s limited infrastructure – especially for electricity –could also place a ceiling on growth.
Another concern is the cost of financing; Lebanon’s banking sector has been successful in terms of its own growth and profitability, but its contribution to wider economic growth is limited.
This situation looks unlikely to change as banks will continue to extend much of their domestic credit to the government.
The Economist Intelligence Unit forecasts that the fiscal deficit will average 10 per cent of GDP per year in 2010 and 2011, and will remain one of the major constraints on Lebanon’s growth.
In this background, Economist Conferences, part of The Economist Group, will host a business roundtable on June 15 at the Four Seasons hotel in Beirut.
The forum will discuss how Lebanon can take advantage of its home-grown talent and once again become a regional hub.
The issues of the fiscal deficit, the infrastructure for electricity and telecoms, the role of the banking sector, human capital, and Lebanon’s legal environment for doing business, will all be discussed through an interactive debate at Economist Conference’s first roundtable. – TradeArabia News Service