Lebanon's Current Economic Situation

Lebanon’s civil war (1975-1990) hampered its economic capabilities; national exports were halved and its status as a market and banking center went downhill. Since the war ended, Lebanon has rebuilt its physical infrastructure and financial institutions through many loans. The country has been granted over $4 billion to help stabilize its economy. Known as the Paris II Donors Conference, seventeen countries pledged their monetary support to Lebanon in 2002, with Saudi Arabia pledging the most at $700 million. The money was financed by these donors on the condition that certain reforms be carried out—reduction in government spending, increased taxes and privatization of some state activities. This program triggered intense debate and flat out opposition from various legislators, so progress with these reforms have been slow to come, especially in regard to the privatization of the telecommunication and airline industries.

To further hurt its economy, the Israel-Hezbollah conflict caused an estimated $3.6 billion in infrastructure damage, which led international donors to pledge $1 billion in reconstruction assistance. These donors met in 2007 and agreed to pledge an additional $7.5 billion for development on the condition that Lebanon took seriously its privatization commitments. Political tension and debate over these structural adjustment policies continue to delay economic growth, most notably in tourism.

Although Lebanon is suffering through economic hardship, people around the country are still importing and exporting, buying and selling. Agriculture only accounts for 5.2% of the GDP (recall the lack of arable land), but citrus, grapes, tomatoes, apples, vegetables, potatoes, olives and tobacco are still produced. Industry represents 18.4% of Lebanon’s GDP, with banking, tourism, food processing, wine, jewelry, cement, textiles, mineral and chemical products, wood and furniture products, and some oil refining particularly important for the country’s revenue. The rest of Lebanon’s GDP (76.4%) is service-oriented.

Lebanon’s major export partners include Syria, the United Arab Emirates, Switzerland, Saudi Arabia and Turkey, while its largest import partners are Syria (again), Italy, the United States, France, Germany, China and Saudi Arabia. From the latter countries, Lebanon imports its necessary petroleum products, as well as cars, medicine, meat and general consumer goods.