Following World War I, France acquired a mandate over the northern portion of the former Ottoman Empire province of Syria. The French demarcated the region of Lebanon in 1920 and granted this area independence in 1943. Since independence the country has been marked by periods of political turmoil interspersed with prosperity built on its position as a regional center for finance and trade. The country's 1975-90 civil war that resulted in an estimated 120,000 fatalities, was followed by years of social and political instability. Sectarianism is a key element of Lebanese political life. Neighboring Syria has historically influenced Lebanon's foreign policy and internal policies, and its military occupied Lebanon from 1976 until 2005. The Lebanon-based Hizballah militia and Israel continued attacks and counterattacks against each other after Syria's withdrawal, and fought a brief war in 2006. Lebanon's borders with Syria and Israel remain unresolved.
Middle East, bordering the Mediterranean Sea, between Israel and Syria
limestone, iron ore, salt, water-surplus state in a water-deficit region, arable land
Population - distribution
the majority of the people live on or near the Mediterranean coast, and of these most live in and around the capital, Beirut; favorable growing conditions in the Bekaa Valley, on the southeastern side of the Lebanon Mountains, have attracted farmers and thus the area exhibits a smaller population density
Arabic (official), French, English, Armenian
BEIRUT (capital) 2.226 million (2015)
- Conventional long form
- Lebanese Republic
- Conventional short form
- Local long form
- Al Jumhuriyah al Lubnaniyah
- Local short form
- Geographic coordinates
- 33 52 N, 35 30 E
- Time difference
- UTC+2 (7 hours ahead of Washington, DC, during Standard Time)
- Daylight saving time
- +1hr, begins last Sunday in March; ends last Sunday in October
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Lebanon has a free-market economy and a strong laissez-faire commercial tradition. The government does not restrict foreign investment; however, the investment climate suffers from red tape, corruption, arbitrary licensing decisions, complex customs procedures, high taxes, tariffs, and fees, archaic legislation, and weak intellectual property rights. The Lebanese economy is service-oriented; main growth sectors include banking and tourism.
- External debt stocks
- US$ 30,895,977,000
- Total tax rate (% of commercial profits)
- Real Interest Rate
- Manufacturing, value added (% of GDP)
- Current Account Balance
- US$ -8,145,515,688
- Labor Force, Total
- Employment in Agriculture
- Employment in Industry
- Employment in Services
- Unemployment Rate
- Imports of goods and services
- US$ 31,599,116,561
- Exports of goods and services
- US$ 25,903,891,468
- Total Merchandise Trade
- FDI, net inflows
- US$ 2,341,880,814
- Commercial Service Exports
- US$ 15,583,970,984
citrus, grapes, tomatoes, apples, vegetables, potatoes, olives, tobacco; sheep, goats
banking, tourism, food processing, wine, jewelry, cement, textiles, mineral and chemical products, wood and furniture products, oil refining, metal fabricating
- jewelry, base metals, chemicals, consumer goods, fruit and vegetables, tobacco, construction minerals, electric power machinery and switchgear, textile fibers, paper
- Saudi Arabia 12.1%, UAE 10.6%, Iraq 7.6%, Syria 7.1%, South Africa 6.6% (2015)
- petroleum products, cars, medicinal products, clothing, meat and live animals, consumer goods, paper, textile fabrics, tobacco, electrical machinery and equipment, chemicals
- China 11.5%, Italy 7.1%, Germany 6.8%, France 6%, US 5.7%, Russia 4.6%, Greece 4.4% (2015)
- Country Risk Rating
- A very uncertain political and economic outlook and a business environment with many troublesome weaknesses can have a significant impact on corporate payment behavior. Corporate default probability is high.
- Business Climate Rating
- The business environment is difficult. Corporate financial information is often unavailable and when available often unreliable. Debt collection is unpredictable. The institutional framework has many troublesome weaknesses. Intercompany transactions run major risks in the difficult environments rated C.
- Robust banking system
- Financial support from the diaspora and the international community and strong potential for recovery
- Discovery of offshore natural gas deposit
- Political divisions along sectarian lines and significant differences of political opinion over the Syrian issue
- Major exposure to regional geopolitical trends
- Very high level of public debt
After a 29 month political stalemate that paralysed the country, Lebanon elected General Aoun as a new President. This former career soldier and Hezbollah supporter is the third General to become head of state and succeeded Michel Sleiman whose term of office ended in May 2014. General Aoun’s candidature was supported by his two main rivals, the Christian head of the Lebanese Forces (LF) Samir Geagea and the former Sunni Prime Minister Saad Hariri, both unsympathetic to the Syrian President, Bashar al-Assad, and his Hezbollah allies in Lebanon. His election is expected to allow the country to emerge from its political vacuum and economic paralysis which served to highlight major issues in terms of political patronage and corruption. On 7 November 2016, Saad Hariri, leader of the Future Movement party, was appointed Prime Minister. His task will be to form a government that can represent all the various political movements in Lebanon.
Growth in 2016 was no more than 1% and was evidence of the difficulties faced by the economy during the institutional paralysis and the spillovers of the Syrian crisis. There should however be a slight upturn in economic activity in 2017 following the election of President Aoun. The normal drivers of Lebanese growth, financial services, tourism and property, will however continue to suffer as a result of low levels of confidence in households and companies. Exports, with the loss in competitiveness of the Lebanese pound, are likely to continue on a downwards path but could rapidly improve if a solution were to emerge in the Syrian conflict. Investments, and particularly in real estates, are at a very low level because a loss of appetite among foreign and expatriate. Lebanese investors suffering as a result of the slowdown in the Gulf Cooperation Council zone. Following the allocation of one billion dollars to boost bank credit, the Lebanese Central Bank is expected to continue initiatives to support activity. It could however be obliged to increase its rates following increases in US rates. Household consumption, which accounts for 80% of growth, will once again be the crucial factor in sustaining economic activity. The momentary deflationary episode, resulting from economic weakness and falling wages because of the influx of Syrian refugees, is expected to be replaced by a moderate increase in inflation in 2017.
After improving in 2016, the public deficit is expected to worsen further in 2017. The reduction in transfers to Electricité du Liban, which continues to feel the benefits of lower oil prices, has resulted in a reduction in public spending. This will however only partly make up for the very slow growth in public revenues. Whilst the primary balance remained in surplus in 2016, the increase in the debt servicing charge, following the strengthening of the US dollar has led to a further deterioration in the public accounts. In 2017, debt servicing will continue to have a negative impact on the public finances. The room for budget manoeuvre available to the new government of Saad Hariri is thus likely to remain limited at the same time as it faces a variety of challenges. The political vacuum of the last two years delayed the implementation of any reforms aimed at improving the public finances at the same time as the debt ratios were worsening. Public debt, which was in excess of 140% of GDP in 2016, is likely to increase by more than 7 percentage points in 2017. Essentially domestic, a large portion of it is held by the local banks. The viability of the debt therefore depends on the ability of the banking system to attract dollar deposits. At the same time, the high level of exposure of the Lebanese banking system to the public debt increases the systemic risk linked to a sovereign default.
The significant current account deficit will continue in 2017. The effect of low oil and gas prices on imports will continue to be offset by the fall in exports. The balance of services will however improve thanks to the financial services sector. Remittances from workers abroad and FDI will continue to suffer from weaker economic activity on the GCC countries. Following a financing package of the Banque du Liban central bank, currency reserves have been increased and are equal to 15 months’ of imports.