Business Monitor International


Lebanon and Syria Business Forecast Report

Published 16 December 2014

  • 51 pages
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  • Includes 3 free updated quarterly reports
 
$1,195.00
Lebanon and Syria Business Forecast Report

Core Views

  • The ongoing civil war in Syria is having severe repercussions on the Lebanese economy. Lebanon's medium-term growth trajectory will settle well below pre-crisis levels due to a lack of investment in transportation and energy infrastructure.

  • Despite renewed fears over the economy's gaping external asymmetries, a loyal depositor base in the domestic banking sector, combined with a massive arsenal of foreign exchange reserves, should help bolster underlying stability through what will turn out as a prolonged period of political volatility. This will minimize the potential for an unexpected devaluation of the pound in 2015.

Major Forecast Revisions

  • We forecast real GDP in Lebanon to expand by 2.6% in 2015, from our previous forecast of 2.4%. That said, elevated political instability will continue to hinder exports and consumer spending. Despite a reduction in terrorist attacks in the capital Beirut over the past quarters, levels of political violence remain elevated in the country. Moreover, given elevated political polarisation, the current government will be unable to enact any structural economic reform this year.

Key Risks To Outlook  

  • Given Lebanon's reliance on foreign capital to finance domestic demand (as evidenced through its large current account shortfall), a marked deterioration in regional or global capital markets over the coming quarters could slow financial inflows, which would negatively impact growth.

  • As the civil war in Syria shows no signs of abating, tensions between Lebanese political blocs pro and against Syria's President Bashar al-Assad will remain a key source of instability.

Macroeconomic Forecasts (Lebanon 2012-2015)
Indicator 2012 2013e 2014f 2015f
Nominal GDP, USDbn 42.6 45.4 45.1 46.3
Real GDP growth, % y-o-y 1.5 1.6 1.8 2.6
Consumer price inflation, % y-o-y, eop 10.0 1.1 2.5 3.6
Exchange rate LBP/USD, eop 1,504.00 1,503.50

Table of Contents

Executive Summary - Lebanon
11
Core Views
11
Major Forecast Changes
11
Key Risk To Outlook
11
Chapter 1
13
SWOT Analysis
13
Domestic Politics
14
Political Vacuum Detrimental To Economy And Security In 2015
14
Lebanese political institutions will be unable to undertake economic reform and decisively improve the security situation, resulting in
Lebanese political institutions will be unable to undertake economic reform and decisively improve the security situation, resulting in
slow expansion of the economy and continued political instability in 2015
TABLE: Political Overview
14
Long-Term Political Outlook
16
Muddling Through Challenges
16
Lebanon will not return to civil war over the coming decade, but the country will be politically unstable amidst a plethora of challenges
A dysfunctional institutional framework will ensure that the political process remains slow, contributing to slow economic growth and
A dysfunctional institutional framework will ensure that the political process remains slow, contributing to slow economic growth and
popular discontent versus the political system
Chapter 1
19
SWOT Analysis
19
Economic Activity
20
Uninspiring 5-Year Outlook Amidst Protracted Instability
20
Growth in the Lebanese economy will accelerate only modestly over the coming years due to protracted political instability and a lack of
Growth in the Lebanese economy will accelerate only modestly over the coming years due to protracted political instability and a lack of
structural reform
6% in 2014 and 2015, respectively, with private consumption remaining
the key growth driver of the economy
TABLE: Economic Activity
20
Monetary Policy
23
Inflation To Increase In 2015
23
Price pressures will increase in Lebanon in 2015 as a result of accelerating consumer spending and a pickup in housing and food
Price pressures will increase in Lebanon in 2015 as a result of accelerating consumer spending and a pickup in housing and food
prices
TABLE: Monetary Policy
23
Banking Sector
24
Acquisitions And Foreign Expansion Key For Profitability
24
Acquisitions and foreign expansion will be key to increase profitability in the Lebanese commercial banking industry in 2015
Asset
expansion will remain robust as credit growth continues apace and risks to stability are limited
Chapter 1
27
The Lebanese Economy To 2023
27
Slow Growth As Willingness For Reform Lags
27
Lebanon's economy will expand slowly over the coming decade, a result of high security risks, slowing demographic growth and the lack
Lebanon's economy will expand slowly over the coming decade, a result of high security risks, slowing demographic growth and the lack
of political willingness to undertake structural economic reform
A massive infrastructure deficit and elevated public and external debt
loads will also weigh on our outlook to 2024
TABLE: Long-Term Macroeconomic Forecasts
27
Executive Summary - Syria
29
Core Views
29
Major Forecast Changes
29
Key Risk To Outlook
29
Chapter 2
31
SWOT Analysis
31
Domestic Politics
32
US Strategy Ineffective, But Deeper Military Involvement Unlikely
32
The US will not deploy combat troops on the ground in Syria and Iraq to fight the jihadist insurgency or remove Syrian ruler Bashar
The US will not deploy combat troops on the ground in Syria and Iraq to fight the jihadist insurgency or remove Syrian ruler Bashar
al-Assad
The US involvement in the Syrian and Iraqi fronts will be protracted, as the current strategy of aerial bombings will fail to
eradicate radical rebel groups
TABLE: Political Overview
32
Long-Term Political Outlook
34
Conflict Scenarios Point To Turbulent Decade Ahead
34
We expect the civil war in Syria to continue for many years
A negotiated settlement following a protracted conflict or a formal breakup
of the country appear at this stage the two most likely outcomes, while an outright victory by either the regime or the rebels is less
of the country appear at this stage the two most likely outcomes, while an outright victory by either the regime or the rebels is less
probable
TABLE: Long-term scenarios
34
Chapter 2
37
SWOT Analysis
37
Economic Activity
38
Protracted Contraction As Economic Disparity Increases
38
The Syrian economy will continue to shrink over the next five years as a result of the protracted civil war
Economic activity will gradually
stabilise within government-held regions, which will see a partial resumpt ion in production and exports, and territory under rebel control,
stabilise within government-held regions, which will see a partial resumpt ion in production and exports, and territory under rebel control,
which will become increasingly impoverished
TABLE: Economic Activity
38
TABLE: MENA - Operational Risk
39
Currency Forecast
40
SYP: Pronounced Losses Ahead
40
Elevated inflation and the continuation of the civil war will result in significant losses for the Syrian pound over the coming years
We
forecast the unit to trade at SYP220
00/USD in the official market by the end of 2015, and to lose almost 80% of its value by the end of
2018
TABLE: Currency Forecast
40
TABLE: Exchange Rate
41
Chapter 2
43
The Syrian Economy To 2023
43
Protracted War Leads Economy To Shrink
43
The civil war in Syria will result in a sharp contraction of GDP compared to pre-war levels, and the real economy will only return to
The civil war in Syria will result in a sharp contraction of GDP compared to pre-war levels, and the real economy will only return to
growth in 2020
Economic activity will partially stabilise within different regions of the country, with government-control led areas faring
better than rebel-held territory
TABLE: Long-Term Macroeconomic Forecasts
43
Chapter 3: BMI Global Assumptions
45
Global Outlook
45
Warning Signs Growing
45
Table: Global Assumptions
45
Table: Developed States, Real GDP GrowtH, %
46
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
Table: Emerging Markets, Real GDP Growth, %
47

The Lebanon and Syria Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in the Lebanon and Syria and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of The Lebanon and Syria's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of The Lebanon and Syria's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise The Lebanon and Syria's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in The Lebanon and Syria, including currency volatility, the commodity price boom and protectionist policies.

The Lebanon and Syria Business Forecast Report by Business Monitor International (BMI) includes two major sections: Economic Outlook and Political Outlook.

Economic Outlook:

How will the the Lebanese and Syrian economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for The Lebanon and Syria through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Lebanon and Syria Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for The Lebanon and Syria and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on The Lebanon and Syria, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in The Lebanon and Syria over the next 5-years?

BMI's The Lebanon and Syria country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the the Lebanese and Syrian Market - Political Strengths, Weaknesses, Opportunities and Threats facing The Lebanon and Syria.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for The Lebanon and Syria's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark The Lebanon and Syria's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express