Business Environment in Lebanon
Lebanon has a free-market economy with a strong laissez-faire (hands-off) commercial tradition. Following a drawn out civil war (1975-1990), Lebanon started to rebuild the country’s physical and social infrastructures by a massive reconstruction program in 1992. The government is continuing these structural reforms. The GDP growth rate in 2006 was 0%, due to the Israeli invasion and aerial attacks. Since this time, the country’s GDP increased by almost 23% and in 2010 by 7% according to the IMF.
The particularity of the Lebanese economy is that it finds itself opposed to the current global economic cycles, since it is in full growth and has surplus liquidity. However, this economic situation is highly contextual: Lebanon is catching up on the delay caused by both its civil war and the 2006 war. This rate cannot only be explained by the work of private agents.
Because the state is little present in the strategic market behavior, Lebanon offers very few basic utilities (water, electricity) and their cost borne directly by the final consumer, which strongly impedes potential growth.
The government’s key challenge will be reducing the national debt, which represents 150% of the GDP. Unemployment is officially at 18%, yet, in the absence of reliable statistics, it could in reality reach 20-25%. IMF estimates 2010 inflation at 5%.
The country is able to preserve its momentum in the coming years, if indeed the political situation does not worsen (regional tensions and results of the Special Tribunal for Lebanon following the assassination of Rafik Hariri)
|GDP (billions USD)||34.92||39.25e||42.54||45.93e||48.74|
|GDP (Constant Prices, Annual % Change)||8.5||7.5e||2.5||5.0e||4.0|
|GDP per Capita (USD)||9,054||10,044||10,747||11,456e||11,998|
|Inflation Rate (%)||1.2||4.5||6.5||3.0e||2.2|
|Current Account (billions USD)||-3.72e||-4.74||-5.14e||-5.57e||-|
|Current Account (in % of GDP)||-11.1e||-12.8||-12.8||-13.0e||-|
Source: IMF - World Economic Outlook Database
Note: (e) Estimated Data
Main Sectors of Industry
The country’s sustained growth can be explained by the vigor of the key sectors of its economy. The banking sector saw record profits, profits of the three largest banks growing by 19% on 2009. The sustained and lucrative banking activity does not however constitute a real support to the private sector because the majority of liquidity coming from banks is used to finance the national debt.
Lebanon also has a booming real estate sector, which benefits from the burst of the real estate bubble in Dubai. Demand coming from the Arab countries is indeed very high and in the first half of 2010 the average price for m2 in the center of Bayreuth reached 7,000 UDS, equal to an annual growth of 41%.
Lebanon has fertile lands, however the agricultural sector is under-developed and only contributes up to 5% of the GDP.
|Breakdown of Economic Activity By Sector||Agriculture||Industry||Services|
|Employment By Sector (in % of Total Employment)||-||-||-|
|Value Added (in % of GDP)||5.3||16.5||78.2|
|Value Added (Annual % Change)||3.5||3.0||8.7|
Source: World Bank - Last Available Data.
|Lebanese Pound (LBP) - Average Annual Exchange Rate For 1 USD||1,507.50||1,507.50||1,507.50||1,507.50||1,507.50|
Source: World Bank
Indicator of Economic Freedom
- Moderately free
- World Rank:
- Regional Rank:
Foreign Trade in Figures
Lebanon has strengthened its openness to international trade by signing an Association Agreement with the EU, by working toward accession to the WTO, and by signing a free-trade agreement with the Gulf Cooperation Council (GCC) in May 2004. According to half-year figures published by the Lebanese Higher Council for Customs, the total value of imports and exports reached almost 11 billion USD at the end of June 2010, an increase of around 12% compared to the level reached at the end of June 2009. The current share of foreign trade in the country’s GDP is around 65%. Its three main export partners are Iraq, Switzerland, and Syria. Lebanon mainly exports pharmaceutical products, textiles, tobacco, pearls & precious stones, electric & electronic equipment, iron & steel, salt, sulfur and machinery. Its three main import partners are Italy, France and Germany. The country mainly imports mineral fuels, oil, vehicles, machinery, pearls & precious stones, electric and electronic equipment. In the first half of 2010, the trade deficit reached 9.8 billion USD, an increase of 12% which reflects a certain vigor of domestic demand.
|Foreign Trade Indicators||2006||2007||2008||2009||2010|
|Imports of Goods (million USD)||9,647||12,251||16,754||16,574||18,460|
|Exports of Goods (million USD)||2,814||3,574||4,454||4,187||5,021|
|Imports of Services (million USD)||8,720||9,973||13,445||14,301||-|
|Exports of Services (million USD)||11,565||12,744||17,558||16,869||-|
|Imports of Goods and Services (Annual % Change)||-3.2||18.5||16.9||6.5||-|
|Exports of Goods and Services (Annual % Change)||-2.6||13.9||13.7||5.3||-|
|Imports of Goods and Services (in % of GDP)||42.1||48.2||53.7||47.0||-|
|Exports of Goods and Services (in % of GDP)||21.3||23.0||24.6||22.3||-|
|Trade Balance (million USD)||-6,115||-7,880||-11,010||-11,179||-|
|Trade Balance (Including Service) (million USD)||-3,304||-4,843||-5,677||-||-|
|Foreign Trade (in % of GDP)||63.4||71.2||78.3||69.3||-|
Source: WTO - World Trade Organization ; World Bank
Main Partner Countries
(% of Exports)
|United Arab Emirates||9.6%|
|Other partnersClose extended list||46.9%|
(% of Imports)
|United Arab Emirates||1.6%|
|Other partnersClose extended list||55.4%|
Sources of General Economic Information
Ministry of Economy and Trade
Ministry of Finance
- Statistical Office
Central Administration for Statistics
- Central Bank
Central Bank of Liban
- Stock Exchange
Beirut Stock Exchange
- Search Engines
- Economic Portals
An Nahar: the country'smost important paper
- Executive Power
- The President is the head of the state and is elected by the National Assembly for a six-year term. The Prime Minister is appointed by the President in consultation with the National Assembly and acts as the head of the government, to serve a four year term. Though the Prime Minister enjoys the executive powers which include implementation of the law in the country and running the day-to-day affairs, the President also holds a strong and influential position which includes promulgation of laws passed by parliament and ratification of treaties. The Cabinet is chosen by the Prime Minister in consultation with the President and members of the National Assembly. As per the constitution of the country, the President must be a Maronite Catholic Christian and the Prime Minister a Sunni Muslim.
- Legislative Power
- The legislature in Lebanon is unicameral. The parliament called National Assembly consists of 128 seats; with its members elected by popular vote on the basis of proportional representation, with quotas according to religion, to serve four-year terms. Legislative power is vested in both the government and the parliament. The executive branch of the government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. The Prime Minister cannot dissolve the parliament nor can he veto its enactments. The Speaker of the Parliament must be a Shi'a Muslim.
- Main Political Parties
- Lebanon has numerous political parties, but they play a much less significant role in the country’s politics than they do in most parliamentary democracies. Coalitions usually exist only for contesting elections, and rarely form a cohesive bloc in the National Assembly after the election. Some of the major political parties in Lebanon are:
- Current for the Future – a political movement and a major political party in Lebanon;
- Progressive Socialist Party – ideologically secular and officially non-sectarian, but in practice follows the Druze faith;
- Hope Movement – advocates greater respect and resources for Lebanon's Shi'ite population;
- Party of God (Hezbollah) - Shi'a Islamist militant organization, supported by Iran;
- LF (Lebanese Forces) – a former militia but now a secular political party, supported mainly by Christians;
- The Lebanese Phalanges (Amine Gemayel);
- The National Liberal Party (Dory Chamoun);
- The Democratic Renewal Movement (Nassib Lahoud);
- The Movement of the Democratic Left (Atallah Elias);
- The Syrian Nationalist Social Party (Ali Qanso);
- The Free Patriotic Movement (Michel Aoun).
- Current Political Leaders
- President: Michel SULAYMAN (as of 25 May 2008)
Prime Minister: Najib MIQATI (since 25 January 2011).
- Next Election Dates
- National Assembly elections in 2014.
Indicator of Freedom of the Press
- World Rank:
- 6 places up compared to 2008
Indicator of Political Freedom
- Partly Free
- Political Freedom:
- Civil Liberties:
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