Lebanon

Lebanon

Major Economic Indicators

Table: Major Economic Indicators of Lebanon
Table: Major Economic Indicators of Lebanon
  • Lying at the eastern end of the Mediterranean Sea, with Syria to the north and Israel to the south, Lebanon has been at the centre of many Middle East conflicts. Following the 1975-90 civil wars, its government stockpiled debt on account of its bid to reconstruct its damaged infrastructure. More recently, the Syrian crisis has aggravated Lebanon’s economic plight, with the country receiving an estimated 1.5 million refugees since 2011. This has further widened fiscal deficits and intensified social unrest.
  • The Lebanese economy is service-oriented with the country functioning as a financial hub for the Middle East, thanks in part to its free market system and banking secrecy laws. Services account for about 70% of Lebanon’s GDP, followed by industry (25%) and agriculture (6%). The banking sector is the main contributor to fiscal receipts and has continued to expand despite the Syrian civil war. On the downside, tourism, another driver of growth, has suffered greatly, with visitor numbers shrinking by 30% between 2010 and 2015. In addition, continual power shortages are further hindering economic development.
  • A number of the major economic reforms in Lebanon have been put on hold amid the political stalemate caused by the Syrian war and the spreading violence in the country. The parliament has failed to elect a new president due to the repeated postponement of parliamentary elections (now delayed until 2017). In order to spur growth, Lebanon’s Central Bank announced a fourth economic stimulus package (worth US$1 billion) in September 2015, and renewed in January 2016 its subsidized loans programme for housing and new/existing projects in sectors including industry, agriculture and technology through 2016. Following its latest consultation with Lebanon, the IMF recommended a consolidation strategy under which the country should aim to stop fiscal deterioration while putting its debt repayments on a sustainable path.
  • Post-war reconstruction has increased Lebanon’s trade deficits, though they narrowed in 2015 when imports fell faster than exports. Lebanon exports jewellery, chemicals and consumer goods, mostly to South Africa, the Gulf states and Switzerland, while importing mineral fuels, electrical/electronic and pharmaceutical goods as well as cars, mostly from China, Italy, France, the US and Germany.
  • Lebanon is a member of the WTO and the Greater Arab Free Trade Area (GAFTA). Its import tariffs are among the lowest in the Middle East and North Africa (MENA) (under 5% for most items). It has signed free trade agreements with many trade blocs, including the EU, European Free Trade Association, Gulf Co-operation Council (GCC) and the Mercosur. In April 2016, Lebanon joined the Agadir Free Trade Agreement (AFTA) to gain greater access to the EU market (other AFTA members include Egypt, Jordan, Morocco, Tunisia and Palestine). Lebanon has expressed a keen interest in China’s Belt and Road Initiative, seeing itself as a gateway to the Arab world. A number of leading Chinese enterprises, including Huawei, Great Wall Motor and Geely have already set up operations in the country.
  • The Investment Development Authority of Lebanon (IDAL) is the investment promotion agency of Lebanon. Focused sectors for investment promotion include agriculture, agro-industry, industry, information technology, media, technology, telecom and tourism. Information on investment climate and incentives provided is available on IDAL’s website.
  • Despite continuous regional disturbances, FDI flow to Lebanon increased by 6.6% YoY to US$3.1 billion in 2014. Cumulative FDI reached US$56.8 billion in 2014, up from US$44.3 billion in 2010. According to China’s Ministry of Commerce, China’s FDI stock in Lebanon in the period of 2010-2014 almost doubled from US$2.01 million to US$3.78 million.
Table: Hong Kong Trade with Lebanon
Table: Hong Kong Trade with Lebanon

More Information

More information on the Belt and Road countries’ economic and investment environment, tax and other subjects that are important in considering investment and doing business are available in The Belt and Road Initiative: Country Business Guides.