"Within one month our revenues had jumped over 50%."

Trade in Lebanon

cafes in beirut

The economy of Lebanon is a developing economy, with a private sector that contributes to 75% of aggregate demand and a large banking sector that supports this demand. In 2009, Lebanon ranked 33rd in the Human Poverty Index. The IMF forecast a growth of 7% for Lebanon’s real GDP in 2010 and 2011 following 9% growth in 2009 and 8.5% in 2008. A combination of beautiful climate, many historic landmarks and World Heritage Sites continues to attract large numbers of tourists to Lebanon. In addition, Lebanon’s strict financial secrecy and capitalist economy have given it significant, though no longer dominant, economic status among Arab countries. The thriving tourism and banking activities have naturally made the services sector the most important pillar of the Lebanese economy. The majority of the Lebanese workforce attains employment in the services sector as a result of the abundant job opportunities. The GDP contribution, accordingly, amounts to roughly 67.3% of the annual Lebanese GDP, according to the US State Department. However, dependence on the tourism and banking sectors leaves the economy vulnerable to political instability

Due to its tightly regulated financial system and the highest gold reserve in the Middle East, Lebanese banks largely avoided the financial crisis of 2007–2010. In 2009, despite a global recession, Lebanon enjoyed 9% economic growth and hosted the largest number of tourists in its history; however, by 2011, economic growth had slowed to below average for the region, as reported by the IMF. Given the frequent security turmoil it has faced, ranging from frequent wars and political turmoil, the Lebanese banking system has adopted a conservative approach, with strict regulations imposed by the central bank to protect the economy from political instability. Lebanon is also one of the biggest tourist hot spots in the Middle East.  In 2011, Lebanon hosted more than two million tourists, a record number, passing the previous 1974 record of 1.4 million tourists. The number of tourists grew by 39% over the previous year, the largest increase in any country according the World Tourism Organization. To boost the economy and increase foreign direct investments, the Lebanese government has established a national investment promotion agency, IDAL, the Investment Development Authority of Lebanon in 1994. It was established with the aim of promoting Lebanon as a key investment destination, and attracting facilitating, and retaining investments in the country.

The U.S. enjoys a strong exporter position with Lebanon, generally ranking as Lebanon’s fourth-largest source of imported goods. More than 160 offices representing U.S. businesses currently operate in Lebanon. Since the lifting of the passport restriction in 1997, a number of large U.S. companies have opened branches or regional offices, including Microsoft, American Airlines, Coca-Cola, FedEx, UPS, General Electric, Parsons Brinckerhoff, Cisco Systems, Eli Lilly, Computer Associates and Pepsi Cola. The goods that Lebanon imports the most are, petroleum products, cars, medical products, clothing, meat products, consumer goods, paper, textile fabrics and tobacco. While the goods that Lebanon exports the most are, authentic jewelry, inorganic chemicals, miscellaneous consumer goods, fruit, tobacco, construction minerals, electric power machinery and switchgear, textile fibers and paper. The Lebanese market is somewhat small however, with a population of 4,224,000, as estimated by the Lebanese government in 2011. The GDP per capita was estimated at $10,747, by the IMF in 2011, reflecting a more middle income economy. The overall nominal GDP was measured at $42.539 billion.

Overall, Lebanon is definitely a difficult country to do trade in. It was ranked at 104th on the World Bank’s Ease of Doing Business Rank. However, it definitely has some strong points such as a great geographic location for tapping into middle eastern markets and strong institutions. Lebanon is known for its unique efforts in the Middle East to guarantee civil rights and freedom to its citizens, ranking first in the Middle East and 26th worldwide (out of 66 countries) in the The World Justice Project’s Rule of Law Index 2011. However, its central location and political environment make it ripe for war, with Israel going to war with it multiple times, as well as a history of civil strife. Just recently, in January 2011, the national unity government collapsed after all ten opposition ministers and one presidential appointee resigned due to tensions stemming from the Special Tribunal for Lebanon, which was expected to indict Hezbollah members in the assassination of former prime minister Rafic Hariri, as reported by BBC. The collapse plunged Lebanon into its worst political crisis since the 2008 fighting, and indicated further political gains for the Hezbollah-led opposition March 8 Alliance, which gained a parliamentary majority. So clearly their are some major risks to doing business in Lebanon. However, it is one of the most dynamic markets in the Middle East, with a strong tradition for resilience, consistently rebuilding itself after tragedies.

 

Tags: , ,

Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

Subscribe

Get our news and articles

No comments yet.

Leave a Reply

CommentLuv badge