The World Bank published a report on Tuesday on the economic outlook for the Middle East and North Africa (MENA) region for April 2024, in which it forecasts economic growth of 0.5% for Lebanon in 2024, compared with an economic contraction of 0.2% in 2023 and 0.6% in 2022.
Average real GDP per capita growth is also expected to improve from 1.2% in 2022 to 2.4% in 2023 and 3.1% in 2024.
The financial institution also expects Lebanon’s current account deficit to remain at 10.4% of GDP, compared with 11% in 2023 and 32.7% in 2022, and for the general budget to be balanced in 2024, compared with a surplus of 0.5% of GDP in 2023 and a deficit of 2.9% in 2022.
The report considers that Lebanon was already suffering from a high debt-to-GDP ratio prior to the 2019 crisis, as the aforementioned ratio reached 155% in 2018 compared with 135% in 2013. The report states that the debt-to-GDP ratio increased by around 17 points to 172.3% during 2019, with the economy contracting by 7%, and by around 22 points during the period between 2020 and 2023 to reach 201%, as inflation levels partially mitigated the sharp increase in the corresponding value of foreign currency-denominated debts due to the decline in the value of the local currency.
The institution also believes that the ongoing conflict in the region comes at a time when global economic growth is slowing for the third year in the wake of the COVID-19 pandemic. In addition, the report states that economic performance in the Middle East and North Africa region lags behind that of emerging market economies and other developing economies, which are expected to grow by 4.4% in 2023 and 3.9% in 2024, compared with forecast growth rates of 1.9% and 2.7%, respectively, for the MENA region.
The report also points out that higher oil prices, a consequence of the war in Ukraine, led to a significant performance gap between the region’s oil-exporting countries (which benefited from higher oil revenues) and oil-importing countries, which, like the rest of the world, suffered from slower growth. However, this gap has recently narrowed (oil prices having fallen by 9.5% since October 2023) and is likely to remain small over the coming period.