Politics & Economics

Lebanon Faces Worst Economic Crisis in Five Decades

Middle East

The Arab daily Asharq Al-Awsat has reported that around 10% of Lebanese business enterprises have closed over the past years.

Head of the Beirut Traders Association, Nicolas Chammas, has remarked that Lebanon is on the verge of witnessing its greater economic crisis in 50 years. Factors that are said to have the potential to push the country towards an economic crisis are the large budget deficit, one of the highest in the world, a bloated public sector, leading to the delay in the payments of public sector workers, a private sector in decline, a lack of economic reform, and the political crisis in neighbouring Syria, which has had adverse effects on the Lebanese economy. In addition, it has been noted that there is also an absence of the US Dollar in the local Lebanese market, leading to a reliance on a weak local currency.

The Ministry of Labour in Lebanon has reported that around 123 foreign-owned enterprises have been closed since the middle of this year due to a lack of legal work permits, but that the majority of enterprises have shut their doors due to their inability to pay for the rent and bills of the premises.

The Lebanese economy has seen a general slowdown since 2011, coinciding with the start of the civil war in Syria. Growth rates fell dramatically from around 8% in 2010 to an average of around 1.5% between 2011-2018. The growth rate is expected to be even lower than 1% in over 2019.

Lebanon has nevertheless received promises of international development projects in the country. However, these projects are largely contingent on what is being called “dissociation policy”, which refers to Lebanon’s shift away from any involvement in regional conflicts.

Earlier this year Lebanon saw a series of protests in which demonstrators stood in front of the Ministry of Labour and demanded political and economic reforms that would tackle the issue of deteriorating economic conditions and widespread unemployment. News of an economy heading towards crisis could trigger further social unrest in the country.