Lebanon economy up 5%
The country's economy grew 5% in 2004, fuelled by tourism and investment from other Arab countries
Lebanon's economy grew 5% in 2004, fuelled by tourism and investment from other Arab countries, and should register similar growth this year, the central bank governor said.
The growth in gross domestic product, the highest since 1997, came on top of a healthy 3% expansion in 2003 and was achieved despite political tensions that emerged in the late summer, Riad Salameh said.
"Political tensions partly hit confidence between the end of August and mid-November, especially in the foreign exchange market," Salameh said. "But this did not stop growth reaching 5%."
Lebanon was hit by crisis when, at the behest of neighbouring power-broker Syria and despite an international outcry, a constitutional amendment was rammed through parliament extending the term of President Emile Lahoud.
In the process, the UN Security Council adopted a resolution demanding that foreign troops be withdrawn from Lebanon and that the country's sovereignty be respected.
Salameh is confident of a 5% GDP growth figure this year. GDP growth to the equivalent of US$20 billion in 2004 was due to Arab investment in the country's property sector and a good tourist season, Salameh said.
He said the confidence of investors was reflected by a 12%rise in bank deposits to US$58 billion, or nearly three times total GDP. "The worldwide drop in the dollar exchange rate favoured the Lebanese economy, which is strongly dollarised, and the services sector remains the real motor of growth," he said.
On the negative side, however, inflation picked up from 2.5%in 2004 to 4% last year.
That stemmed from the fact that Lebanon imports a large proportion of its consumer and capital goods from euro-based countries and the high price of oil in a country that does not produce any.
"Its impact, however, was tempered by monetary stability," Salameh said. Another negative factor bearing on the economy is that the already astronomical public debt reached US$35.86 billion at the end of the year.