2014年-世界发展银行全球_Lebanon_Economic_Monitor_Fall_2014___Downside_Risks_Materialize_34页_3mb

Lebanon Economic Monitor Summary

Core Content

The Lebanon Economic Monitor provides an analysis of the country's economic developments and policy changes over the past six months, placing them in a global and long-term context. It highlights the challenges posed by domestic political instability, regional spillovers from the Syrian conflict, and the impact of these factors on economic growth, fiscal policy, external sector dynamics, and financial markets.

Main Points

Political and Security Context

• A domestic political stalemate has led to an unprecedented political vacuum in the three branches of government, with the Presidency of the Republic vacant since May 2014.
• The Syrian conflict has had a major spillover effect, with ISIS taking control of parts of Iraq in 2014, increasing terrorist activity in Lebanon.
• The security situation has fluctuated, with a mid-year improvement that temporarily boosted consumer and investor sentiment, but later deteriorated due to renewed attacks.

Economic Activity and Growth

• Real GDP growth is expected to rise to 1.5% in 2014, an improvement over 0.9% in 2013, the worst performance since 1999.
• Tourism, commerce, and real estate experienced a mild rebound in the spring and summer of 2014, reflecting a temporary improvement in the security situation.
• GDP growth is projected to be 2% in 2015, but this depends on the abatement of regional tensions and the assumption of a stable political environment, which may not hold.

Fiscal Policy

• The central government's fiscal deficit is expected to widen to 10.2% of GDP in 2014, up from 9.4% in 2013.
• The primary balance is in deficit for the third consecutive year, widening by 0.7 percentage points to 1.2% of GDP.
• Gross public debt is projected to reach 149% of GDP in 2014, up from 143.1% at the end of 2013.
• The government finances the deficit primarily through Treasury bills and Eurobonds, with 75.7% of gross public debt held by commercial banks and BdL as of mid-2014.

External Sector

• The current account deficit remains elevated but lower than pre-crisis levels, forecasted to stay around -8% of GDP in 2014.
• Trade deficit has remained broadly unchanged at 14-15% of GDP, with declining imports offsetting falling exports.
• FDI has increased due to Syrian refugees adjusting their financial situation, with FDI reaching 8% of GDP in 2014.
• International aid for Syrian refugees has also boosted capital inflows.
• Foreign reserves at the BdL increased to US$31.7 billion by end-2013, representing 71.5% of GDP.

Monetary Policy and Financial Markets

• Inflation reached its lowest level in a decade, averaging 2.7% in 2013, down from 5.7% in 2012.
• Headline and core inflation have abated, but rent and housing inflation is underestimated due to limited coverage in existing indices.
• Monetary policy has been expansionary, with the BdL maintaining exchange rate stability and low inflation.
• BdL launched a stimulus package in 2014 for the second consecutive year, totaling US$800 million, to support the real estate sector and private demand.
• Lending to the private sector increased by 13.2% in 2014, but remains below the 2008-2012 average due to reduced economic activity and risk aversion.

Banking Sector

• The banking sector is liquid, profitable, and well-regulated, but highly exposed to public sector risks.
• Sovereign debt exposure of Lebanese banks increased from 55.2% in 2013 to 56.4% in 2014.
• Non-performing loans (NPLs) are low, and return on equity is in the double digits.
• The loan-to-deposit ratio is one of the lowest in the world, at 31.1% in June 2014.
• Deposit growth has slowed, with non-resident deposits increasing by 5.2% in 2014 compared to 22.1% in 2013.

Key Information

• Lebanon remains host to the largest number of Syrian refugees, with 1.18 million registered as of September 9, 2014, or 26.7% of the total population.
• Youth unemployment has been exacerbated, with estimates exceeding 22% in 2013.
• The labor market is under significant stress, with widespread informality and low productivity.
• The services sector has benefited more from the improved security situation, while real estate, construction, and tourism have been traditional growth drivers.
• Fiscal policy is under strain, with growing deficits and increasing public debt.
• Financial markets have improved, with the equity market rising by 6.7% in 2014, and Lebanese Eurobond spreads narrowing due to lower risk premiums.
• Downside risks to growth remain due to political stalemate and regional instability.

Special Focus: Social Safety Nets

• Social safety nets (SSNs) in Lebanon are underutilized and inefficient, with low coverage and limited targeting.
• The National Poverty Targeting Program (NPTP) is a key initiative aimed at improving SSN effectiveness.
• Syrian refugees have increased pressure on the labor market, contributing to higher unemployment and increased private demand.
• Citizen satisfaction with government assistance to the poor is low, and preference for cash benefits over in-kind support is strong.
• The WEF Social Safety Net Score in the MENA region is relatively low, indicating room for improvement in social protection systems.

Conclusion

The Lebanon Economic Monitor underscores the fragile economic outlook and the increased vulnerability to external shocks. While some positive developments have occurred, such as improved consumer sentiment and increased foreign reserves, structural issues like political instability, labor market inefficiencies, and fiscal mismanagement continue to hinder long-term growth. The Social Safety Net is a critical area for reform, with limited effectiveness and low public satisfaction. The economic outlook remains uncertain, and policy coherence is essential to mitigate risks and stimulate sustainable growth.