Over the past decade, Lebanon’s economy has been facing various critical issues. Thus, now in 2020 Lebanon is currently living through its worst economic crisis since the late civil war. Moreover, even before the coronavirus disaster, the country’s economy was already crashing albeit slowly.
Overall economy system
Lebanon enjoys a free-market economy blended along with strong laissez-faire of commercial traditions. The government usually takes a back seat when it comes to local and international investments. Thus, the government creates a welcoming environment for investors.
However, the country’s overall investment climate does suffer from a wide variety of issues. These issues include excessive and unnecessary red tapes, corruption, arbitrary licensing decisions, along with complex customs procedures. Furthermore, the unreasonable and high taxes, tariffs, and fees in addition to complicated archaic legislation procedures, and inadequate intellectual property rights protection are all additional reasons for the current state of the economy today.
Furthermore, even though the value imports far outstripped exports each year, tourism and remittances from laborers working abroad have helped keep the economy afloat while balancing the trade deficit. Before the crisis, the local’s wages were generally on the rise all while the Lebanese products were starting to expand into the international market.
Therefore, Lebanon’s economy was already trending on a fragile path before the refugee crisis, ongoing corruption, and the global pandemic reign the utmost forms of destruction on its economy.
Main Sectors of Industry
Though Lebanon has the benefits of fertile land along with a moderate climate and abundant water resources, the Lebanese agricultural sector remains under-developed. According to the world bank, this sector only contributes up to 2.9% of the overall GDP while only employing slightly over 12% of the population’s workforce. 30% of The agricultural products are made up of fruits while the rest consists of various kinds of vegetables.
On the other hand, the Industry sector isn’t very promising either. It only accounts for 14.1% of GDP while employing over 22% of the population’s workforce. The sector mainly consists of the manufacturing of agricultural products, metals, minerals, furniture, along with other manufactured goods.
Therefore, the economy is highly dependent on the service sector. The sector makes up 74.7% of the country’s GDP and employs more than two-thirds of the population’s workforce. In the past, the banking system was the backbone of the economy.
However, it is now going through a devastating crisis which is putting the country through more hardships. Also, though the Lebanese banking system used to be known for its luxury and appealing policies, it didn’t offer much help to the private sector. Before the crisis, most of the bank’s liquidity used to finance the growing public debt.
As for the tourism sector, it makes up almost 20% of GDP while also employing almost 18% of the active Lebanese population. The sector used to offer great help to the country’s economy but that changed when in 2011 due to the ingrowing instability in the Middle East.
Furthermore, the sector is bound to receive more damage with the current instability offered by the global virus and the overall unrest in the country. Statistics already prove this prediction since in 2019 the tourists numbers dropped by 14.2% from the previous year. Furthermore, the hotel occupancy rate stated to be only 10% in the capital.
In addition, the real estate sector is also suffering from the situation. The sector bloomed between 2008 and 2011 but it is now suffering like the rest of the economy.
Even in the past, Lebanon has always suffered from a disparity in inaccessibility. Mountains and in lands are usually the victims of this problem.
However, up until 1975, Lebanon used to enjoy great infrastructure features. This of course changed when the civil war destroyed all these privileges. buildings, roads, along with communication centers were utterly destroyed during that duration.
Therefore, From 1990 and inwards, Lebanon worked hard to reconstruct everything that was lost at a rapid pace. However, these new buildings were always the target whenever a new conflict took place in the country. Even the short-lived war between Israel and Lebanon has left the country broken and its vital infrastructure destroyed.
However, through the upcoming years, Lebanon repaired almost 97% of its infrastructure. However, that doesn’t mean that the current infrastructure is anything but fragile and weak. The country always goes through a power shortage which only increased with the current crisis. Moreover, despite the abundance of water sources, some areas still suffer from water shortages.
As for internet and network privileges, Lebanon has developed rapidly despite the ongoing electricity issues. Thus, according to internet world stats, Lebanon hosts over 2,152,950 Internet users. However, despite the great numbers, Lebanon still has one of the slowest Internet connections in the world. It is also considered one of the slowest connections in the Arab world. Furthermore, the connection ranked 153rd out of 184 countries on Net Index in 2013.
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