Lebanon and Syria Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
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Lebanon and Syria Country Risk Report
Product Price
$1,195.00

Core Views

  • The ongoing civil war in Syria is having severe repercussions on the Lebanese economy. Lebanon's medium-term growth trajectory will settle well below pre-crisis levels due to a lack of investment in transportation and energy infrastructure.

  • Despite fears over the economy's gaping external asymmetries, a loyal depositor base in the domestic banking sector, combined with a massive arsenal of foreign exchange reserves, should help bolster underlying stability through what will turn out as a prolonged period of political volatility. This will minimize the potential for an unexpected devaluation of the pound in 2016.

  • A protracted leadership vacuum, elevated sectarian tensions fuelled by entanglement in the Syrian civil war, and the risk of conflict with Israel will all continue to present challenges to Lebanon's stability.

  • The sanctions imposed by the Gulf states on Lebanon since February 2016 will add to the woes confronting the country's tourism sector and wider economy. Barring a rapid resolution to the diplomatic crisis, we cannot rule out the imposition of further retaliatory measures by the Gulf - putting pressure on investment flows into Lebanon, project financing, and remittances.

  • The Lebanese economy will remain in the doldrums throughout 2016, as protracted regional instability and political paralysis at home continue to erode the country's competitiveness. While we forecast growth to inch up to 2.0% in real terms in 2016 from our estimate of 1.6% for 2015, this rate will remain too weak to make a tangible difference to Lebanese living standards.

  • The gradual normalisation of US monetary policy from the end of 2015 onward will lead to a sustained rise in Lebanon's debt -servicing costs. While the Lebanese government is some way off from a refinancing crisis, public investment will be squeezed even further and the country's fiscal outlook remains bleak.

Key Risks

  • Given Lebanon's reliance on foreign capital to finance domestic demand (as evidenced through its large current account shortfall), a marked deterioration in regional or global capital markets over the coming quarters could slow financial inflows, which would negatively impact growth.

  • As the civil war in Syria shows no signs of abating, tensions between Lebanese political blocs pro and against Syria's President Bashar al-Assad will remain a key source of instability.

  • Rising tensions between the Lebanese Shi'a militant organisation Hizbullah and Israel raise the potential for another major military conflict between the two sides over the coming quarters. Such a scenario would have substantial local and regional implications, reshaping the outlook of the Syrian civil war and presenting a risk to the success of the diplomatic detente between Iran and the P5+1 powers.

Macroeconomic Forecasts (Lebanon 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f = BMI estimate/forecasts; Source: National Authorities, BMI
Real GDP growth, % y-o-y 2.0 1.6 2.0 3.0
Nominal GDP, USDbn 49.6 52.8 52.8 55.9
Consumer price inflation, % y-o-y, eop -0.7 -3.4 2.3 2.8
Exchange rate LBP/USD, eop 1,512.00 1,508.10 1,507.50 1,507.50
Budget balance, % of GDP -6.2 -7.3 -7.7 -7.7
Current account balance, % of GDP -23.8 -20.6 -17.3 -16.4
BMI Index
BMI Index
BMI Risk Index - Lebanon
6
BMI Risk Index - Syria
7
Executive Summary - Lebanon
11
Core Views
11
Key Risks
11
Chapter 1
13
SWOT Analysis
13
Economic Growth Outlook
14
Political Paralysis Among Major Impediments To Growth
14
GDP By Expenditure Outlook
15
TABLE: COMPONENTS OF GDP (% OF TOTAL)
16
TABLE: GOVERNMENT CONSUMPTION FORECASTS
16
TABLE: PRIVATE CONSUMPTION FORECASTS
16
TABLE: FIXED INVESTMENT FORECASTS
17
TABLE: NET EXPORTS FORECASTS
17
TABLE: GDP GROWTH FORECASTS
17
Monetary Policy
18
Deflation To End By 2016
18
TABLE: MONETARY POLICY
18
External Trade And Investment Outlook
19
Lebanese Exporters: No Recovery In Sight
19
Outlook On External Position
20
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
20
TABLE: TOP 5 GOODS IMPORTS (2014)
21
TABLE: TOP 5 GOODS EXPORTS (2014)
21
Chapter 1
23
The Lebanese Economy To 2025
23
Slow Growth As Willingness For Reform Lags
23
TABLE: LONG-TERM MACROECONOMIC FORECASTS
23
Chapter 1
25
SWOT Analysis
25
Domestic Politics
26
Facing A Perfect Storm Of Political Challenges
26
TABLE: POLITICAL OVERVIEW
26
Long-Term Political Outlook
27
Muddling Through A Plethora Of Challenges
27
Chapter 1
31
SWOT Analysis
31
Executive Summary - Syria
33
Core Views
33
Key Risk
33
Chapter 2
35
SWOT Analysis
35
Economic Growth Outlook
36
Further Contraction Ahead In Regime-Controlled Areas
36
GDP By Expenditure Outlook
37
TABLE: COMPONENTS OF GDP (% OF TOTAL)
37
TABLE: GOVERNMENT CONSUMPTION FORECASTS
37
TABLE: PRIVATE CONSUMPTION FORECASTS
38
TABLE: FIXED INVESTMENT FORECASTS
38
TABLE: NET EXPORTS FORECASTS
38
TABLE: GDP GROWTH FORECASTS
38
Chapter 2
41
The Syrian Economy To 2025
41
Long-Term Damage Of Protracted Civil War
41
TABLE: LONG-TERM MACROECONOMIC FORECASTS
41
Chapter 2
45
SWOT Analysis
45
Domestic Politics
46
Peace Talks At A Stalemate, Fighting To Continue
46
TABLE: POLITICAL OVERVIEW
46
TABLE: PEACE PROCESS - RECENT DEVELOPMENTS
47
Long-Term Political Outlook
48
Conflict Scenarios Point To Turbulent Decade Ahead
48
TABLE: LONG-TERM SCENARIOS
49
Chapter 2
51
SWOT Analysis
51
Chapter 3: BMI Global Macro Outlook
53
Global Macro Outlook
53
Summer Of Risk
53
TABLE: GLOBAL ASSUMPTIONS
53
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
54
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
55
TABLE: LEBANON - MACROECONOMIC DATA & FORECASTS
57
TABLE: SYRIA - MACROECONOMIC DATA & FORECASTS
57

Assess your risk exposure in Syria, Lebanon with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Syria, Lebanon with confidence.

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