Lebanon Businessnews News

Negative growth due to Syrian conflict
World Bank estimates needs at $7 billion
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The economic and social impact of the Syrian crisis on the local economy will reduce GDP growth by about 2.9 percent annually, according to the Economic and Social Impact Assessment of the Syrian Conflict report, issued by the World Bank.

The report was conducted in cooperation with the United Nations, European Union, and International Monetary Fund (IMF) upon the request of the Lebanese government.

According to the report, Syrian refugees totaled 914,000, estimated at 21 percent of the population. This number is expected to rise to 1.3 million at year’s end, and 1.6 million by end-2014. This will incur some $7 billion in additional costs for the local economy.

If refugee figures are verified, contraction in growth will lead to huge losses in salaries, revenues, taxes, investment, and consumption. About 170,000 additional citizens will fall below the poverty line. $170 million will be required to support impoverished families.

The unemployment rate will double to reach 20 percent. The flow of refugees is expected to increase supply in the labor market up to 50 percent. Some $240 million will be needed to implement labor programs aimed at improving the quality of life.

The crisis will decrease the state’s ability to collect revenues for a total value of $1.5 billion. Government spending will rise by $1.1 billion, due to higher demand on the public services. In addition, the unstable security situation will negatively impact investors’ trust. The budget deficit is expected to grow by an additional $2.6 billion between 2012 and 2014.

The financial burden of the Syrian conflict on the sectors of health, education, and social security could reach $340 million. About 170,000 refugees are expected to enter schools in 2014. About $1.6 billion will be required for all three sectors to recover.

The financial burden on the infrastructure is expected to reach $590 million by 2014, and $1.1 billion are required to achieve recovery.

The demand on electricity is expected to surge to 362 MW at the end of 2014. The financial cost to meet demand is estimated at around $400 million.
Reported by Rania Ghanem
Date Posted: Sep 19, 2013
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