Lebanon under the weight of losses: Conflicts inflict $10 billion on the economy
Conflicts are inflicting $10 billion on the Lebanese economy
Amid successive crises, Lebanon faces significant economic challenges, with Minister of Economy and Trade, Amin Salam, announcing massive financial losses estimated at $10 billion due to ongoing conflicts. These figures come at a time when the country struggles to maintain its economic stability, with devastating impacts on vital sectors such as tourism and agriculture.
Negative impact
Amid continuous conflicts in Gaza and southern Lebanon, the Lebanese economy suffers staggering losses amounting to $10 billion, as stated by Amin Salam, Minister of Economy and Trade in the interim Lebanese government.
In press statements on the sidelines of the International Monetary Fund and World Bank meetings in Washington, Salam emphasized the deep negative impact the war has had on the economy, particularly in key sectors such as tourism and agriculture.
-
Lebanese analyst reveals the consequences of the economic crisis on the country’s internal situation
Salam pointed out that tourist revenues, which amounted to $7 billion the previous year, were significantly affected by the outbreak of war, posing a major blow to Lebanon, which heavily relies on these revenues. He spoke of the significant damage inflicted on the tourism sector, which declined by 75% due to the volatile security situation affecting the flow of tourists and Lebanese expatriates, leading to the cancellation of many planned events and trips for the winter season.
$10 billion in losses
The minister also drew attention to the severe damage inflicted on the agricultural sector due to Israeli bombardment, resulting in losses ranging from $2.5 to $3 billion.
Salam affirmed that the total losses to the Lebanese economy amount to approximately $10 billion so far, considering the economic growth forecasts for the current year. The government hoped to achieve a growth rate ranging between 2.5 and 3%, primarily supported by the tourism and agriculture sectors.
However, it appears that the war may push the country towards an economic downturn. Salam expresses hope in maintaining the chances of reaching an agreement with the IMF during the annual meetings, two years after reaching an agreement at the expert level without finalizing a deal.
In the same context, the Minister of Economy and Trade criticized the failure to implement the reforms required by the IMF to reach a final agreement, attributing this responsibility to political parties, especially due to the delay in passing the necessary legislation to rescue the economy.
Salam stressed the urgent need for swift action by the legislative authority to enact the necessary laws, noting that the agreement with the IMF represents a glimmer of hope and will provide a framework for the future of the Lebanese economy. He warns that without this agreement, Lebanon’s economic situation will be challenging, and the recovery process will be longer and more difficult.
The worst-case scenario
Meanwhile, Lebanese political analyst Mohammed Al-Hani says Lebanon has not yet moved towards a comprehensive plan to resolve the crisis, with the country still mired in a major social, economic, and financial crisis exacerbated by institutional and political paralysis. While tourism has positively contributed to economic growth during the past period, the tourism sector alone cannot replace more inclusive, sustainable, and diversified growth engines that can help the country better withstand shocks and assist in restoring its economy to a strong recovery path.
He added that the uncontrolled currency devaluation and default align with the worst-case scenario we anticipated for over a year and a half, namely the scenario of state inaction, instead of adopting a comprehensive rescue plan ensuring equitable loss distribution and sustainable recovery.
