Positive half year recorded. Consumption and investments seem to rebound - Lebanon

Positive half
year recorded
Consumption and

investments seem to rebound

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A survey by Bloomberg forecasts the economy to grow 1.7 percent in 2016. Although this figure is a decrease from the forecasted 2.2 percent undertaken at the end of the first quarter, further indicators have registered good results overall in the first half of the year, according to Bank Audi’s half yearly economic report.

VAT receipts saw a seven percent growth. In the real sector, cement deliveries, the value of property sales, and construction permits all witnessed increases, reaching 14.5 percent, 11.7 percent, and 7.5 percent respectively. The figures offer an insight into the present property market. Airport passengers and tourists have both increased. The indicators that have declined include cleared checks and the velocity of money.

Externally, the first half of 2016 saw a widening of the balance of payment deficits. Audi Bank reported that this was due to a growing trade deficit, which has increased due to declining exports and growing imports. Financial inflows grew 5.5 percent in the first half of the year but failed to counterbalance the broadening trade deficit.

The slight improvement seen in some economic sectors failed to reverberate within the capital markets sector. Attractive pricing ratios did not help the Beirut Stock Exchange (BSE) make progress. BSE’s downward trajectory continued during the first half of the year.

“In parallel, the Eurobond market attracted a decent bid during the first half of 2016, with both locals and internationals net buyers of Lebanese debt papers,” reported Bank Audi.

The banking sector provided additional loans to the private sector worth $1.66 billion in the first half of 2016. This is almost double the new loans granted in the same period last year which amounted to $843 million. The surge in lending is mainly the result of two factors, the relatively low base in the first half of 2015, and the accrued incentives of the Central Bank that aim to stimulate the economy, said Joe Sarrouh, Executive Advisor of the Chairman at Fransabank.

The banks have abundant liquidity and there is ample room for lending, Sarrouh said. The primary liquidity in the banking sector is 47 percent.

Small and medium-sized enterprises (SMEs) are making inroads into the economy. Kafalat loans rose 30 percent in the first five months of this year, after a downtrend last year. The agriculture sector formed the major recipient of these loans, followed by the industrial and tourism sectors.

Reported by Derek A. Issacs and Shikrallah Nakhoul
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Date Posted: Aug 12, 2016