Dina Mahmoud (Beirut, London)
The pressures on the Lebanese economy due to the continuing war in the Gaza Strip and its regional repercussions have dashed the hopes of international financial institutions that it could recover, even if only in a relative way, and deepened the economic and financial crisis.
The war, which has been ongoing since the seventh of last October, hampered the fragile economic growth that was recorded in Lebanon during the few months preceding the outbreak of battles, and led to a slowdown in inflation rates, which led to curbing the consumer price index, reducing its rise to approximately 0.02%, by late 2023.
This was paralleled by the relative stability of the local currency, which had lost more than 90% of its value since 2019, with its price stabilizing over the last five months, at the level of 89 thousand liras per one dollar, in the parallel or black market.
These indicators raised hopes that the Lebanese economy would witness a cautious recovery after years of contraction, which prompted World Bank officials to say that it was expected, before the outbreak of the war in Gaza, that the growth rate in Lebanon would increase by 0.2%, for the first time since 2018. .
But the war and its continuing repercussions on the regional scene have led, according to what the officials themselves said, to it becoming expected that the Lebanese economy will return to the abyss of recession again, especially since any potential recovery in it depends primarily on tourism revenues and remittances from expatriates, two factors that have long been warned. Experts on the danger of relying on them sustainably.
Government data recently unveiled in Beirut showed that the inflation rate in Lebanon is still at three figures, for the third year in a row, amid confirmation that what is described as “the shock of a decline in tourism spending,” in reference to the significant decline in tourism spending numbers. Tourists coming to the country because of the war may have played a significant role in hindering any economic recovery in its territory.
In statements published by the Middle East Eye website, Lebanese economic analysts confirmed that their country appears particularly vulnerable to the negative consequences of the current war, in light of the fact that it is a country that relies significantly on imports on the one hand, and on foreign financial flows, including… Investments on the other hand.
At the same time, and in light of the ongoing mutual attacks on the Lebanese-Israeli border, as one of the consequences of the war in Gaza, large areas of agricultural land in the south, which includes the largest arable area in Lebanon, were damaged, making it impossible for farmers there to harvest their crops. And sell it.
The damage to some of these crops due to the war would deprive Lebanon of one of the important sources of hard currency received, given that some of these agricultural products are exported.
In light of these developments, analytical economic circles in Beirut have warned that the continuation of the war will push the Lebanese economy to contract further, and may put it facing an unknown fate, as the crisis of the presidential and governmental vacuum from which the country suffers continues, and its institutions are almost completely paralyzed.
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