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Distributional Impacts of COVID-19 in MENA
Conclusion At the onset of the COVID-19 pandemic, Lebanon had been grappling with a severe economic and financial crisis and serious political instability. The cumulative effects of these crises had led to a contraction in the real value added in the various economic sectors and to soaring levels of inflation. What further impact will the pandemic have on the welfare of households in the host community and of the Syrian refugees? This chapter contends that there will be a significant increase in poverty from an already high base. Using the international poverty line, poverty for the Lebanese will rise by about 28 percentage points from the 2019 baseline by end-2021, and for the Syrian refugees poverty will rise by about 52 points. These increases will result in large numbers of individuals for both groups falling into poverty by end-2021, to total about 2.28 million (of which 1.5 million are Lebanese and 780,000 are Syrian refugees). While the results suggest that the crises have affected both communities, they also reveal inequalities in the transmission of the shock. First, the crises are expected to leave refugees, who are already poorer than the host community, much poorer. Second, the poorer households’ share of food expenditures before the crisis was so high that their susceptibility to changes in food prices is expected to be marked. After the economic deterioration, this effect is likely to be even more pronounced. Notably, food and nonalcoholic beverage prices have increased four times in 2020 alone. The analysis highlights the need for better, more accessible, and more reliable data in Lebanon. Notably, strong assumptions had to be made to carry out the microsimulations, which should be indicative of the welfare losses incurred by the people of Lebanon as a result of the crises, yet those assumptions are not likely to reflect measured poverty. Indeed, as the crisis unfolds, the importance of data and monitoring cannot be overstated in addressing the poverty and economic concerns that ensue. To better prepare for the future, “under crisis conditions, reliable poverty data are even more important for guiding response and recovery policies that will not leave vulnerable groups behind” (World Bank 2020b, 3). The results suggest that an economic recovery in Lebanon is not expected under the current macroeconomic outlook. They also highlight that a response commensurate with the magnitude of the crisis is necessary. While structural reforms—including curbing the increase in prices and reigniting economic activity—are crucial in the path to recovery, social protection programs are necessary in the immediate term to lessen the impact of the overlapping crises. Further, any response to the crises
