LEBANON

RB: Najib Mikati was reappointed as prime minister following the May 2022 parliamentary election. Since then, government formation has been fraught, leading to a prolonged political deadlock. The parliament is more fractured but sectarian interest groups remain dominant, and they seek to protect their interests, slowing the required overhaul of the crisis-ridden economy.

Political venality, the lack of government, and rifts over the selection of a new president will delay the finalisation of the International Monetary Fund (IMF) programme agreed on in April 2022 into early 2023. Even if multilateral funding begins to flow, the recovery will be slow and partial over the coming year, reflecting the depth of the ongoing economic, currency, financial, and debt crises. Concerns about the influence of Hezbollah, an Iranian-backed Shia group, will make Gulf Arab states wary of extending financial support. Increasing inflation and basic goods shortages, and continued restrictions on banking withdrawals are likely to continue to drive unrest.

JM: With its troubled politics and a struggling economy, Lebanon runs a huge trade deficit relative to its gross domestic product, although its geography and economic capacity give it the potential to become an export power in the Mediterranean and beyond.

For now, its export economy lags behind that potential. It ships niche products to a few trading partners, such as apples and apricots to Egypt, nuts to the US, and cocoa and cocoa preparations to Jordan.

Lebanon imports cars and trucks from the US, and iron and steel from Turkey. Turkey is Lebanon’s top supplier of imports, shipping cereals, plastics, gold and a lot of other products to its Mediterranean neighbour. Overall, Lebanese exports slipped in 2022, to $2.3 billion from $2.6B, with top export markets the US, Egypt, Switzerland, Qatar and Jordan. Meanwhile, imports rose to $16.3 billion from $12.4 billion, boosting the trade deficit. Top import sources were Turkey, China, Greece, Italy and the US.