Lebanon - Economy



Lebanon is traditionally a trading country, with a relatively large agricultural sector and small but well-developed industry. Until the civil war, it had always figured prominently as a center of tourist trade. The 1975–76 war caused an estimated $5 billion in property damage and reduced economic activities to about 50% of the prewar level. The cost of reconstruction after the Israeli-Palestinian-Syrian war of 1982 was estimated at $12–15 billion. Lebanon has been able to survive economically because of remittances from abroad by Lebanese workers and companies, external aid by the United States, France, Germany, and Arab countries, and foreign subsidies to various political groups. A residual effect of the 1982 war was political uncertainty, which poisoned the economic climate in the following years. In 1984 and after, there was a pronounced deterioration in the economy. In 1987 inflation peaked at 487%. After the 1989 Taif Accord for National Reconciliation ended hostilities, the economy began to recover. Economic activity surged in 1991, and in 1993 the Hariri Government was able to stabilize the economy, and launch a program to reconstruct the economy's infrastructure. Real GDP grew 4.2% in 1992, after growing by about 40% in 1991.

Since 1988, the economy has continued to post growth rates averaging 7.5%, although a rising budget deficit threatens to hamper economic reforms. Israel's Operation Grapes of Wrath in April 1996 cut economic development short, but in the same year, the stock market had reopened, and investment had made significant returns. In 1997, unemployment remained high at about 18% although inflation had been reduced to around 5% by 1998. Gross domestic product grew by 3% in 1998. Growth in 1999 was 1% and flat in 2000, according to the Central Bank estimate. Projections for 2001 from different sources range from 2% to 4%. Inflation was 1% in 1999 and zero in 2000, and did not exceed 3% in 2001. High unemployment remains a persistent problems, at 20 to 25% in 1999 and 2000, and 15% to 20% in 2001. Among Lebanese youth unemployment is estimated to be 30%. The absence of a government department of statistics (it was closed because of the war) makes all figures questionable.

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