Transmission Channels

with the latest macroeconomic growth and inflation projections and related labor market characteristics of hosts and refugees.

This chapter begins with a discussion of how households are affected by the combination of economic crises and a health crisis, before detailing how the study was done and its findings on poverty and the “new poor.” The analysis uses two poverty lines: the national line, which is often context specific and reflects the consumption baskets at the national level, and the upper-middle-income international poverty line of US$5.50 per person per day. Our key findings are that poverty is rising sharply for both populations within Lebanon:

• For the host community, using the international poverty line, the increase is an estimated 13 percentage points for 2020, from the 2019 baseline, and 28 points for 2021. For Syrian refugees, the increase is an estimated 39 percentage points for 2020 and 52 points for 2021.

• For the host community, at the national poverty line, the increase is an estimated 33 percentage points for 2020, from the 2019 baseline, and 46 points for 2021. For Syrian refugees, the increase is an estimated 24 percentage points for 2020 and 29 points for 2021. The refugees’ baseline is 24 percentage points higher than that of the Lebanese.

• Moreover, because of the inequalities in the transmission of the shock, the crises are expected to leave refugees, who are already poorer than the host community, much poorer. And the impact of the pandemic on

Lebanon’s large informal market is also expected to be marked.

Transmission Channels

The combined COVID-19 and economic crises have affected household welfare in a number of ways. The impacts are often monetary, because of a loss in income or of price changes, as well as nonmonetary, such as service disruptions in health, education, and other sectors. This study focuses on the monetary impacts on consumption, the welfare aggregate used to measure poverty. Perhaps the most direct impact is a reduction in labor income as a result of contracting the illness, but the more salient impacts are those on the economic sectors in which individuals are employed, causing earnings and employment shocks.

Besides direct losses to labor income, households face negative effects on nonlabor income, such as a decline in remittances owing to the global economic slowdown. In addition, disruptions in supply chains, employment, and changes in demand have affected prices in the Middle East