Econostrum | Economic News in the Mediterranean

Lebanon's economic collapse accelerates

Written by Gérard Tur on Tuesday, December 14th 2021 à 16:30 | Read 396 times

In the third quarter of 2021, excluding inflation, most retail sectors in Lebanon will see their turnover fall by 60 to 90%.

Beirut ricochets from crisis to crisis (photo: Virginie Pont (Creative Commons license)
Beirut ricochets from crisis to crisis (photo: Virginie Pont (Creative Commons license)
LEBANON. In its diagnosis on retail trade published each quarter on its website, Fransabank and its partner ACB (Association of Beirut Traders) note an acceleration of "the deterioration of economic activity" in Lebanon in the third quarter of 2021.

Fransabank and the ACB have developed an index to assess the non-inflationary evolution of the turnover of retail businesses. In the third quarter of 2021, almost all sectors will experience a fall of between 60% and 90%. Only the real turnover of fuels increases (+3%).

Fransbank sees this as the result of the impoverishment of the Lebanese due to the increase in fuel prices following the end of the subsidy mechanisms, the shortages of electricity and petrol, the sudden drop in foreign investment, the end of tourism, the collapse of more than 90% of the value of the Lebanese pound against the dollar... So many disasters resulting from the absence of political governance in the country. It took months to form a government, which, once in place, has the greatest difficulty in functioning because the different clans that compose it do not get along. Its members have not met since the beginning of November 2021, blocking negotiations with the IMF to break the deadlock.

Three quarters of the Lebanese are now living below the poverty line and therefore can no longer consume. Depending on the sources (Central Bank, IMF, rating agencies), the losses of the banking sector are estimated at between 63 and 100 billion dollars. Savers can no longer access their foreign currency deposits.

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