Lebanon Economic Monitor, Fall 2019 : So When Gravity Beckons, the Poor Don't Fall
Lebanon is in Crisis. While it is too early to gauge the economic impact of recent events, it is important to note that even prior to the eruption of the demonstrations, the World Bank projected a small recession in 2019; we now estimate that the r...
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| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/349901579899850508/Lebanon-Economic-Monitor-So-When-Gravity-Beckons-the-Poor-Dont-Fall http://hdl.handle.net/10986/33279 |
| Summary: | Lebanon is in Crisis. While it is too
early to gauge the economic impact of recent events, it is
important to note that even prior to the eruption of the
demonstrations, the World Bank projected a small recession
in 2019; we now estimate that the recession will be deeper.
There has been an unprecedented banking holiday, with banks
closed over October 18-31 for retail and other transactions,
reopening thereafter with informal capital controls and
other uncoordinated measures, then closing again for 10 days
on November 9. Critical short-term financing for businesses
has been interrupted, leading to disruptions all along the
supply chain and an ultimate impact on workers. Unemployment
is expected to rise and poverty, already high, will follow.
The emerging parallel exchange market is likely to trigger
inflationary pressures, hurting the poor and middle class
disproportionally. Shortages of imports are also expected to
materialize. The crisis is a culmination of chronic
conditions that have long impeded Lebanon’s development
process. Lebanon’s Systematic Country Diagnostic (SCD)1
identified elite capture, hidden behind the veil of
confessionalism and confessional governance, as one of two
overarching constraints for the country’s economic
development (the other being conflict and violence,
stemming, in part, from the broader dynamics of conflict in
the Middle East). Under the guise of preserving post-war
confessional balances, a postwar elite emerged to command
the main economic resources, both private and public,
generating large rents and dividing the spoils of
uncompetitive markets and a dysfunctional and hallowed state. |
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