One of the most destructive wars was the July 2006 war between… Israel And Hezbollah, which lasted for 33 days, is facing today Lebanon A similar conflict between the same parties, but the current economic and institutional conditions differ significantly from before.
An exhausted economy
In 2006, Lebanon had a fully functioning government as well as a sitting president, and the country’s economy was on an upward trajectory, with growth forecasts between 4 percent and 5 percent.
She was Banks It is stable and enjoys high confidence due to the strong balance of payments and large investments, especially from the Gulf countries, where the rise in oil prices at the time led to an increase in their investments in the country, which strengthened the financial markets.
During that war, Arab countries, especially the Gulf countries, responded quickly to Lebanon’s needs, receiving about $1.2 billion in aid from international and Arab organizations.
until Bank of Lebanon The Central Bank at that time was able to intervene to protect the Lebanese pound, supported by a deposit worth $1.5 billion from Kuwait and Saudi Arabia.
And played international conferences such as Stockholm Conference In August 2006 and the Paris III Conference in 2007 played a vital role in attracting financial support, as it collected $7.6 billion in grants and soft loans to support the private sector and implement economic reforms.
The war is destroying what remains of the Lebanese economy
But with Lebanon entering a new war today, the situation is more fragile and completely different, with the country facing an unprecedented financial crisis, as the Lebanese pound has lost more than 90 percent of its purchasing value, inflation has risen significantly, and Beirut no longer receives financial support from International or Arab allies as it was before.
The reserves of the Bank of Lebanon have become almost depleted, while the banking sector has lost more than $70 billion, and the gross domestic product has shrunk by more than 50 percent, pushing 80 percent of the population below the poverty line.
However, the direct and indirect effects of the war on Lebanon did not begin recently, but since October 7, 2023, the country’s tourism and services sectors have been greatly affected, with the number of arrivals at Beirut Airport decreasing by 33 percent and the number of departures increasing by 28 percent. So far, the number of people displaced due to the war has reached about one million, of whom 200,000 have entered Syrian territory.
The S&P Global credit rating agency warned of losses Tourism It alone could reduce up to 23 percent of Lebanon’s GDP.
As he rose World Bank It revised its forecast for the country’s economy from slight growth of 0.2 percent to recession, in addition to the United Nations warning in December that the country could lose between 2 percent and 4 percent of its gross domestic product due to the ongoing conflict.
The private sector has been severely affected, with Lebanon’s headline Purchasing Managers’ Index (PMI) falling to 47.9 last August, reflecting an economic contraction. As for transactions Real estate It decreased by 60 percent as of October 2023, compared to the previous year.
BMI Research, affiliated with Fitch Ratings, has revised its forecast for a contraction in the Lebanese economy to 1.5 percent, highlighting the significant decline in tourism revenues. If we compare to the 2006 war, tourism losses at that time reached $3 billion.
As for my sector Agriculture And industryThey both suffered heavy losses. As of August 2024, farmers have been unable to cultivate 17 million square meters of land as a result of the conflict, while the industrial sector is expected to shrink by more than 50 percent, resulting in losses of about $2 billion.
Lebanese port disturbances exacerbated the crisis, adding about $1.5 billion to the estimated economic damage.
The chief economist at the Food and Agriculture Organization of the United Nations, Ahmed Mukhtar, told Sky News Arabia that approximately 12,000 hectares of agricultural land were abandoned in southern Lebanon when the direct conflict with Israel began, which poses a great danger to the local food system, which could… It leads to the destruction of the social fabric and livelihoods, and since October 2023, more than 340 thousand heads of livestock have died.
Although there are no accurate and official figures regarding the total current and ongoing economic damage in Lebanon, it is certain that the losses have exceeded current estimates, threatening the paralysis of major sectors and the complete collapse of Lebanon’s infrastructure.
Initial estimates also indicate that losses have already exceeded $10 billion, an amount that represents about half of the country’s gross domestic product.
