Lebanon’s capital inflows in the first six months of 2015 shrunk by 33.1 percent to $5.9 billion compared with the same period of 2014, a report by Fransabank said.
“The value of capital inflows to Lebanon reached $5.9 billion in the first half of 2015, a decrease of 33.1 percent over the same period of 2014, as compared to $2.61 billion in the first quarter of 2015,” the report explained.
As a result, the balance of payments recorded a deficit of $1.3 billion in the first half of 2015, as compared to a surplus of $215.7 million during the same period of last year, and a deficit of $850 million in the first quarter of 2015.
Lebanon counts heavily on capital inflows and remittances from Lebanese expatriates to shore up its economy and improve the balance of payments. The report did not explain the reasons behind the drop in capital inflows in the first six months but most economists agree that the deep political impasse and effects of the Syrian war on Lebanon have discouraged investors and expatriates from sending money to the country.
This decline in capital inflow will surely affect the GDP growth this year, although Fransabank projected a growth of more than 2 percent.
Central Bank Governor Riad Salameh earlier predicted a GDP growth of less than 2 percent in 2015, slightly lower than the projection given by the International Monetary Fund.
The report noted that the Lebanese economy recorded a better performance in some economic indicators, namely: it witnessed an increase in the number of tourists (3.18 percent from H1 2014, and 23.1 percent from Q1 2015); the number of passengers at Beirut’s Rafik Hariri International Airport (6.5 percent from H1 2014, and 9.3 percent from Q1 2015); the hotel occupancy rate (6 percent from H1 2014, and 14 percent from Q1 2015); and small- and medium-sized enterprises loan size (11.12 percent from H1 2014, and 6.65 percent from Q1 2015).
But the Lebanese economy has also witnessed a slowdown in some economic indicators in the first half of 2015, as compared to the same period of last year.
“This is indicated by the decrease in several indicators of the real sector, such as construction permits (-19 percent from H1 2014, and -19.8 percent from Q1 2015); number of cars sold (-1.9 percent from H1 2014, and -3.3 percent from Q1 2015); total tonnage of loaded and unloaded merchandise at the Beirut port (-7.7 percent from H1 2014, and -4.7 percent from Q1 2015); number of ships via Beirut port (-14.88 percent from H1 2014, and -16.5 percent from Q1 2015); Customs revenues (-2.23 percent from H1 2014, and -10.2 percent from Q1 2015),” the report said.
The trade deficit volume also decreased (-16.1 percent from H1 2014, and -25.59 percent from Q1 2015) during the first half of 2015.
