IMF Lowers Lebanon Growth Forecast to 1.5%

The International Monetary Fund said Wednesday it has revised down its forecast for economic growth in Lebanon to 1.5 percent in 2011 after many years of robust expansion, due to political uncertainty and unrest in neighboring Syria.

The drop revealed in the IMF's Regional Economic Outlook, released in Dubai, is the second this year after the fund lowered its expected growth to 2.5 percent in the spring.

"That is our best estimate," the IMF's director for the Middle East and Central Asia, Masood Ahmed, told Agence France Presse.

A five-month delay in the formation of a government until June and unrest in Syria have "led to a slowdown in economic activity quite significantly in Lebanon resulting in the revision of our estimates," he said.

He said the two factors have had "consequences on confidence" in the economy which grew at no less than 7.5 percent between 2007 and 2010, according to IMF figures.

Ahmed said that the slowdown is noticed in the property sector, which grew rapidly over the past couple of years, but also in the whole economy.

"It is a more generalized slowdown that we have seen," he said, noting that "the fiscal position has deteriorated a bit, in part because of the slowdown in the economy and also because fuel tax excises have been halved."

Lebanon's fiscal deficit will rise to 7.8 percent of GDP in 2011, compared to 7.3 percent in 2010, the IMF report said.

The fund is more optimistic on the prospects for next year, expecting the economy to pick up pace and expand by 3.5 percent.

"In the second half of the year, there has been a government in place. There is a bit more certainty coming from that," Ahmed said, adding that the "assumption is that during the course of next year, things in the region will continue to stabilize."

Earlier this month, the World Bank revised downward its forecast for Lebanon's economic growth from seven percent expected in January to four percent, forecasting a fiscal deficit of 5.5 percent of GDP.

Lebanon staggers under a public debt of more than 53 billion dollars, equivalent to around 135 percent of the country's GDP.

Tourism witnessed a 15.5 percent drop in the number of arrivals for the first quarter of 2011 compared to the same period in 2010.

Property transactions also fell 21 percent quarter on quarter while customs revenues dropped some 20 percent compared to the same period last year.

The decline was widely attributed to the uprisings gripping the region coupled with domestic troubles that left Beirut without a government for five months.

Source: Agence France Presse

Copyright © 2012 All Rights Reserved.