Economic Overview

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After years of neglect, corruption, financial mismanagement and the war next door in Syria, the Lebanese economy spilled over into a full-blown crisis in 2019, sparking mass protests that demanded sweeping reforms. The economic crisis deteriorated further since, due to the COVID-19 pandemic, rising public debt, a sovereign default, a currency collapse and an explosion at the port of Beirut. The traditional engines of growth in Lebanon (real estate, construction and tourism) have stalled and the banking sector, which until then had been praised for its resilience, has collapsed. According to the latest World Bank data, GDP contracted by 21.4% in 2020, 7% in 2021 and an estimated 5.4% in 2022, when foreign tourism increased by half compared to the previous year but net exports remained negative with imports growing at a faster pace than exports.

Significant tax revenue losses due to the shift towards a cash-based economy that contributed to an uptick in tax evasion and an inflation-driven increase in nominal GDP continued to drive a sharp decrease in revenues as a percentage of GDP, at 5% in 2022 against 7% for expenditure. Overall, the current account deficit was estimated at 14.2% of GDP. The debt-to-GDP ratio rose to 180.7% in 2022, up from 172.5% one year earlier, making Lebanon the third most indebted country in the world, after Japan and Greece (World Bank). Inflation has been surging in recent years: it averaged 186% in 2022, amongst the highest rates globally, on account of the reduced share of goods imported at Bank of Lebanon subsidized exchange rates and increased dollarization in the country’s economy. In the same year, net remittances accounted for 17.2% of GDP. Monetary and financial turmoil continues to drive crisis conditions: the interactions between the exchange rate, narrow money, and inflation continue to shape unstable macroeconomic dynamics. As pointed out by the IMF, Lebanon needs assistance to overcome its deep humanitarian, social, and economic crisis and to implement reforms to bring public finances into order, restructure public debt, rehabilitate the banking system, expand the social safety net, reform state-owned enterprises, and improve governance. On April 7, 2022, the Government of Lebanon and the IMF announced a staff-level agreement on a USD 3 billion, 46 months Extended Fund Arrangement (EFF), although securing IMF Board approval for the EFF will require the completion of ten prior preliminary agreements.

The country faces many humanitarian and social issues in addition to macroeconomic and political challenges. The massive influx of Syrian refugees (25% of the country's population) has shaken the country's demographic balance, labour market, and is putting pressure on the costs of rent, infrastructure and supply of public services such as water and electricity. Unemployment has skyrocketed following the inflow of Syrian refugees, which are competing with Lebanese workers in the informal sector and could hit over a quarter of the workforce. According to the World Bank, more than 60% of the country's young people are not in employment, education or training and over 70% of refugees live under the poverty line. The country faces significant social inequalities: in July 2022, the World Bank reclassified Lebanon as a lower-middle-income country, down from an upper-middle-income country. In the same year, the IMF estimated GDP per capita (PPP) at USD 11,377, while according to Human Rights Watch 78% of Lebanon's population was in poverty as of end-2021 - triple the estimated number in 2020.

Foreign Trade

The share of Lebanon’s foreign trade has been declining sharply in recent years and stood at nearly 79% of GDP in 2021, up from 50% one year earlier mostly due to the contraction in GDP (data World Bank). Lebanon mainly exports minerals (gold), diamonds, furniture, grapes, motor cars and ferrous waste and scrap. The country mainly imports mineral fuels (more than one-fourth of total imports), motor cars, gold, medicaments, and diamonds (data Comtrade 2021).

Lebanon’s main export partners are the United Arab Emirates, Switzerland, Cameroun, Qatar, Egypt, and the U.S.; whereas imports come chiefly from the EU (mainly Greece, Italy, Germany and France), Turkey, China, the U.S., and the United Arab Emirates (Comtrade).
The war in Syria, the drop in demand from countries in the region and the economic and political crisis in Lebanon are having a negative impact on Lebanese exports, while imports are also hindered by the lack of hard currency. The country's trade balance is structurally in deficit, a trend that should worsen in the upcoming future.
 
According to WTO data, in 2021 Lebanese merchandise exports stood at USD 4.5 billion as opposed to USD 13.8 billion in imports. No data is available for the trade in services; however, for the same year, the World Bank estimated the overall trade deficit to account for 26.8% of Lebanon’s GDP. According to preliminary data by the Bank of Lebanon, in the first half of 2022 exports of goods totalled USD 2.3 billion against USD 8.5 billion in imports; concerning trade in services, exports reached USD 3.6 billion vis-à-vis USD 2.7 billion in imports.

COVID-19 Country Response

Travel restrictions

Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.

Import & export restrictions

A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.

Economic recovery plan

For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Lebanon, please consult the country's dedicated section in the IMF’s Policy Tracker platform.

Support plan for businesses

For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.