Lebanon’s economy projected to grow by 1.2% in 2016

BEIRUT: Lebanon’s economic growth for 2016 is forecast to increase by 1.2 percent, according to a recent survey of economists, up from the group’s consensus of 0.7 percent growth for the year when polled in January.

The Economena Analytics survey of 17 economists found that amid this modest growth prediction, the Information, Communication and Technology sector (ICT) is expected to outperform the economy as a whole, followed by education and the manufacturing of food and beverages. Also, the continuing low price of oil is expected to improve consumer buying power.

Economists said they were more optimistic today than they were six months ago about activity in the transportation sector and at restaurants. All 17 survey participants said output in the transportation sector would steady or increase in the next 12 months.

Though the economists gave a downward forecast for expat remittances at the beginning of the year, this has been adjusted upward, albeit showing flat growth going forward. This is due to the fact that the crisis engulfing Lebanon and Saudi Arabia seems to have simmered down, coupled with the continuing growth in the Gulf countries, which seem to have found a way to contain the repercussions of falling oil prices.

“The negative impact on expatriate remittances from low oil prices appears to be more contained than previously thought. The consensus among surveyed economists is for remittances to remain flat over the next 12 months, compared with a negative outlook at the beginning of 2016,” the report said.

But, in comparison, the economists became more pessimistic over real estate prices since the start of the year. Nearly 76 percent of those surveyed said they expect real estate prices to drop in the next 12 months, while 65 percent said price declines would clock in at less than 20 percent lower for the year 2017. This will be accompanied by a higher volume of property transactions, with a considerable number of analysts indicating that reduced premiums would energize activity within the next 12 months.

The January survey which conveyed a relative sense of optimism regarding the prospect of electing a President in 2016 has faded amid the continued political deadlock. “Just one in 17 economists said Lebanon would fill its top political post this year, down from eight economists in the January survey,” the poll reported.

Nonetheless, economists were sharply divided over the possibility of banks sanctions being upheld by the US for violations of the Hezbollah Financing Act. According to the report, five economists said sanctions were likely, another five said they were unlikely, and the rest were uncertain.

Respondents were also pessimistic over oil and gas exploration, with nine in 17 saying that drilling licenses are unlikely to be awarded before end of 2017, again a factor of Lebanon’s political standstill.

The one thing economists agree on however, is the tremulous times facing the hospitality industry, despite the cautious hopefulness over the improvement of tourist arrivals. According to the report, “prospects for hotels are now even less promising than real estate and construction.”

In related business, the head of the Hotel Owners Association, Pierre Achkar, indicated at the end of last year, that more businesses will eventually close down and hundreds of hospitality workers will lose their jobs if the political situation in Lebanon and the region doesn’t improve.

“In the name of tourism, hotel and restaurant owners, nightclubs, travel agencies and car-rental companies, I call on politicians to end their indifference and laxity about the fate of companies and the future of our youths.” Achkar told reporters back in Oct. 2015.

The Lebanese Economic Outlook is a regular survey of economists on their economic forecast, expectations for sectors and principal macroeconomic indicators. It is conducted on a semi-annual basis by Economena Analytics, an independent economic data provider