In this page: Economic Outline | Political Outline | COVID-19 Country Response
For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.
After years of neglect, corruption, financial mismanagement and the war next door in Syria, the Lebanese economy spilled over into a full-blown crisis in 2019, sparking mass protests that demanded sweeping reforms. The economic crisis deteriorated further since, due to the COVID-19 pandemic, rising public debt, a sovereign default, a currency collapse and an explosion at the port of Beirut. The traditional engines of growth in Lebanon (real estate, construction and tourism) have stalled and the banking sector, which until then had been praised for its resilience, has collapsed. According to the latest World Bank data, GDP contracted by 21.4% in 2020, 7% in 2021 and an estimated 5.4% in 2022, when foreign tourism increased by half compared to the previous year but net exports remained negative with imports growing at a faster pace than exports.
Significant tax revenue losses due to the shift towards a cash-based economy that contributed to an uptick in tax evasion and an inflation-driven increase in nominal GDP continued to drive a sharp decrease in revenues as a percentage of GDP, at 5% in 2022 against 7% for expenditure. Overall, the current account deficit was estimated at 14.2% of GDP. The debt-to-GDP ratio rose to 180.7% in 2022, up from 172.5% one year earlier, making Lebanon the third most indebted country in the world, after Japan and Greece (World Bank). Inflation has been surging in recent years: it averaged 186% in 2022, amongst the highest rates globally, on account of the reduced share of goods imported at Bank of Lebanon subsidized exchange rates and increased dollarization in the country’s economy. In the same year, net remittances accounted for 17.2% of GDP. Monetary and financial turmoil continues to drive crisis conditions: the interactions between the exchange rate, narrow money, and inflation continue to shape unstable macroeconomic dynamics. As pointed out by the IMF, Lebanon needs assistance to overcome its deep humanitarian, social, and economic crisis and to implement reforms to bring public finances into order, restructure public debt, rehabilitate the banking system, expand the social safety net, reform state-owned enterprises, and improve governance. On April 7, 2022, the Government of Lebanon and the IMF announced a staff-level agreement on a USD 3 billion, 46 months Extended Fund Arrangement (EFF), although securing IMF Board approval for the EFF will require the completion of ten prior preliminary agreements.
The country faces many humanitarian and social issues in addition to macroeconomic and political challenges. The massive influx of Syrian refugees (25% of the country's population) has shaken the country's demographic balance, labour market, and is putting pressure on the costs of rent, infrastructure and supply of public services such as water and electricity. Unemployment has skyrocketed following the inflow of Syrian refugees, which are competing with Lebanese workers in the informal sector and could hit over a quarter of the workforce. According to the World Bank, more than 60% of the country's young people are not in employment, education or training and over 70% of refugees live under the poverty line. The country faces significant social inequalities: in July 2022, the World Bank reclassified Lebanon as a lower-middle-income country, down from an upper-middle-income country. In the same year, the IMF estimated GDP per capita (PPP) at USD 11,377, while according to Human Rights Watch 78% of Lebanon's population was in poverty as of end-2021 - triple the estimated number in 2020.
Main Indicators | 2020 | 2021 | 2022 (E) | 2023 (E) | 2024 (E) |
---|---|---|---|---|---|
GDP (billions USD) | 24.49 | 0.00 | 0.00 | 0.00 | 0.00 |
GDP (Constant Prices, Annual % Change) | -25.9 | 0.0 | 0.0 | 0.0 | 0.0 |
GDP per Capita (USD) | 3,589 | 0 | 0 | 0 | 0 |
General Government Balance (in % of GDP) | -5.3 | 0.0 | 0.0 | 0.0 | 0.0 |
General Government Gross Debt (in % of GDP) | 150.6 | 0.0 | 0.0 | 0.0 | 0.0 |
Inflation Rate (%) | 84.9 | 0.0 | 0.0 | 0.0 | 0.0 |
Current Account (billions USD) | -3.70 | 0.00 | 0.00 | 0.00 | 0.00 |
Current Account (in % of GDP) | -15.1 | 0.0 | 0.0 | 0.0 | 0.0 |
Source: IMF – World Economic Outlook Database, Latest data available.
Note : (E) Estimated data
Lebanon has fertile lands and benefits from a moderate climate and abundant water resources. However, the agricultural sector is underdeveloped, and only contributes 1.4% of the GDP and 11% of employment (World Bank, latest data available). Key agricultural products include fruits (mainly apples, oranges, bananas and grapes, but also significantly olives) which account for around 30% of total agricultural production, and vegetables (such as potatoes, tomatoes and maize) which account for more than 60% of total production; whereas coffee is the main export product. Just 11% of Lebanon’s population lives in rural areas, but more than one-fifth of households in the agricultural sector are classified as very poor (IFAD). According to the latest figures from the Lebanese Center for Research and Agricultural Studies, the total value of Lebanon’s agricultural production in 2021 stood at about USD 1.3 billion, compared to USD 1.4 billion the year before, and down from more than USD 1.9 billion recorded before the pandemic.
Industry, which accounted for 12.8% of GDP in 2019, dropped to 6.9% of GDP in 2020 due to the COVID-related crisis and stood at just 2.8% in 2021, one of the lowest ratios in the world. It employs 24% of the workforce (data World Bank) and is dominated by the manufacturing of agricultural products, metals, minerals, furniture and other manufactured goods. Before the crisis, there were over 4,700 industrial firms in Lebanon, mainly in the manufacturing of agri-food products, followed by construction materials and chemical products.
Services are the dominant sector of the Lebanese economy, representing 94.1% of the country's GDP and employing 65% of the workforce. The banking sector was traditionally the mainstay of the economy, but it is going through a major crisis. Banking activity, even when it was sustained and lucrative, did not constitute real support for the private sector since most of the liquidity coming from banks is used to finance public debt. Tourism accounts for almost 20% of GDP and employs around 18% of the active population. The sector currently suffers from the serious economic and political crisis that the country is going through, although it showed signs of recovery in the first half of 2022 when the number of tourists doubled compared to the same period one year earlier.
Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
---|---|---|---|
Employment By Sector (in % of Total Employment) | 11.3 | 23.6 | 65.1 |
Value Added (in % of GDP) | 1.4 | 2.8 | 94.1 |
Value Added (Annual % Change) | -7.1 | -6.9 | -3.9 |
Source: World Bank, Latest data available.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.
Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation
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- Free Patriotic Movement: right-wing, christian democracy, civic nationalism
- Development and Liberation Bloc: coalition formed by the Amal Movement and the Arab Socialist Ba'ath Party
- Hezbollah: Shia Islamist political party and militant group
- Progressive Socialist Party: centre/centre-left, its confessional base is in the Druze sect
- Lebanese Forces: Christian-based and former militia during the Lebanese civil war, right-wing.
The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).
The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.
Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House
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Latest Update: September 2023