Boston, MA -- (SBWire) -- 07/30/2013 --The ongoing civil war in Syria is having severe repercussions on the Lebanese economy. Regardless of how the civil war plays out, however, 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, we do not believe pressures on Lebanon's balance of payments position are as pronounced as seen elsewhere across the region. 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 may turn out to be a potentially prolonged period of political volatility. This will minimise the potential for an unexpected devaluation of the pound in 2013.
Major Forecast Changes
We have revised our budget deficit projections, and now expect the total government deficit to come in to the tune of 8.6% of GDP in 2013, from our previous forecast of 9.8% of GDP.
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Key Risk 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.
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New Market Research Report: Lebanon and Syria Business Forecast Report Q3 2013
New Country Reports market report from Business Monitor International: "Lebanon and Syria Business Forecast Report Q3 2013"