Country Report Lebanon January 2011

Outlook for 2011-12: External sector

According to data from the IMF, Lebanon's structural current-account deficit in 2009 widened substantially to 21.9% of GDP (from 13.8% of GDP in 2008) as services credits fell, despite higher tourist numbers. However, given that Lebanon itself does not directly publish current-account data, and the IMF's series have frequently been revised upwards, some of the substantial capital flows-which create a positive overall balance of payments-might in reality be current flows. In 2010 the services surplus widened, and the current-account deficit narrowed to US$7.3bn (19.3% of GDP), despite a larger trade deficit, as higher oil prices and tourism-driven growth pushed up the import bill. Further tourism growth in 2011-12, combined with rising remittances, will narrow the deficit further, to an average of 11.4% of GDP. Lebanon's current-account deficit in 2010 was more than covered by capital inflows, leading to a substantial gross balance-of-payments surplus, and this pattern will be repeated over the forecast period. The main concern is the risk of capital flight in the event of a major political shock, which could create financing difficulties-but under such a scenario, Lebanon would probably receive support from its external allies.

© 2011 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
IMPRINT