The world’s most influential rating agency, the American Standard & Poor’s (S&P), has stated in a report that the war between Israel and Hamas is causing major damage to the tourism sector in the MENA (Middle East and North Africa) region, noting that the countries most affected are Lebanon, Egypt and Jordan, “due to their geographical proximity and the possibility of the conflict spreading beyond their borders.”
According to “possible scenarios,” the agency expects tourism revenues to fall by 70% in Lebanon, 30% in Jordan and 10% in Egypt. The rating agency believes that tourism in the Gulf countries, Turkey and Iraq will not be significantly impacted by the ongoing conflict between Hamas and Israel, depending on how long the conflict lasts or whether it spreads to other areas.
It recalled that in 2022, tourism contributed 26% of current account revenues in Lebanon, 21% in Jordan, 12% in Egypt and 3% in Israel.
Tourism is a major source of foreign currency for many Middle Eastern economies (including Lebanon). It saw a strong rebound in 2023, with a 20% increase over 2019.
Overall, the agency noted that the ongoing conflict is likely to spill over into other MENA economies, expecting real GDP growth in the region’s countries to fall and their external positions to weaken, “although this could potentially be cushioned by support from international donors.”
The report notes that “the war could possibly result in the leak of investment portfolios and non-resident deposits, as well as a decline in foreign direct investment.”
