Lebanon’s economy to contract again this year, says Emirates NBD

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Lebanon

Lebanon’s economy to contract again this year, says Emirates NBD

Lacking a government that can implement essential economic reforms and hit by the fallout of the Russian invasion of Ukraine, Lebanon is facing its fifth consecutive year of economic contraction, Emirates NBD said in a note on Monday.

The Dubai-based lender, which had earlier in the year expected the beleaguered Levantine economy to return to growth in 2022, has now downgraded its real GDP growth forecast for the year to a contraction of -1.7 percent from a modest expansion of 2.9 percent.

This would leave the GDP -39.4 percent smaller in real terms compared to 2017, said Daniel Richards, MENA Economist.

"In 2023, we forecast a modest return to growth at 2.4 percent, but this is as much a product of base effects following the recent troubles as any expectation of a marked improvement in conditions – though the chance of a new IMF deal offers significant upside risk."

Lebanon, which defaulted on debt in 2020 and is in dire need of external support, saw a glimmer of hope in April, when the IMF agreed to initiate steps to back a new support programme. However, soon after Lebanon went to the polls, and as of the end of June, there is still no government