Country Report Lebanon October 2009

Summary

A new government is still being formed, but is likely to be led by the pro-Western "March 14th" coalition and its allies, the winners of the June election.
However, there is a risk that Lebanon could enter another protracted period without a functioning government.
Even once a cabinet is agreed, policymaking will be hampered by a lack of consensus and by the unwillingness of fragile coalitions to address sensitive issues such as the sectarian political system and the role of militias.
Lebanon is vulnerable to renewed tensions in the region, especially those arising from Iran's nuclear programme and the Israeli-Palestinian conflict.
There is a need for fiscal reform to reduce the large public debt stock, as the costs of debt servicing weigh heavily on the budget, but it will be slow at best.
In 2010 the large fiscal deficit is forecast to remain broadly stable at L£5.1trn (US$3.4bn), or 10.3% of GDP, before widening to L£5.2trn in 2011 as higher world interest rates and the expanding debt stock add to debt-servicing costs.
Following estimated growth of 4% in 2009, we forecast economic growth of 4.9% in 2010 and 4.6% in 2011, as a modest pick-up in regional growth boosts investment and tourism spending.

A meeting in early October between the rulers of Saudi Arabia, which backs March 14th, and Syria, which backs March 8th, raised hopes that the two Lebanese factions would reach agreement on a new government.
A long-awaited meeting between the prime minister-designate, Saad al-Hariri, of March 14th, and Michel Aoun, of March 8th, has produced no clear results.
One man has been killed in sectarian violence in Ain al-Rummaneh, a Beirut suburb with a large Christian population.
In the absence of a new government, Lebanon's economic policy agenda has continued to drift. The caretaker finance minister, Mohammed Chatah, has urged politicians to move rapidly to draft a budget for 2010.
Lebanon's gross public debt has continued to climb, reaching US$47.9bn at the end of July 2009, equivalent to 160% of estimated GDP for the year.
A manufacturing exporter, Uniceramic, has been declared bankrupt
The UN Conference on Trade and Development has said that Lebanon received FDI of US$3.61bn in 2008, up from US$2.7bn in both 2006 and 2007.
Lebanon's tourism sector has enjoyed a record summer, with 715,221 tourist arrivals in the three months from June to August.

Source: Country Report

This report covers the following industry codes:
SIC Code: 70;79;39
NAICS Code: 72;71;31