Economic Brief
The Lebanese economy witnessed over the first quarter of 2008 a net improvement in activity.
It looks like a number of domestic and external growth drivers are helping the real sector performance despite the adverse political conditions that have been dampening performance for the past 1$ months. The result was a moderate positive growth since the beginning of the current year.
The quantity theory of money confirms the improvement in growth this year. The growth in the money supply by 14% year-on-year added to the growth in velocity by 17% over the same period, leading to an annual inflation rate of8.9% and a moderate expansion in output.
Cement deliveries, a coincident indicator of building activity, increased, according to figures of the Central Bank, by 7.7% over the first quarter of 2008 as compared to the same period of 2007. Construction permits totaled 2,147,830 square meters in the first quarter of 2008, up by 33.4% from the same period of the previous year, according to the Order of Engineers of Beirut and Tripoli.
The number of tourists totaled 193,778 in the first quarter of 2008, up by7.3% from the same period of 2007. Tax-free purchases reported an. increase of44% in the first quarter of 2008 relative to the same period of the previous year. The number of passengers at the airport increased by 13.5% over the same period.
Figures released by the Higher Customs Council show that the aggregate value of imports and exports totaled US$ 4,373 million in the first quarter of 200$, up by a major 31.6% from US$ 3,323 million in the same quarter of 2007.
However, the trade deficit continued to pose a constraint on the sector, as it widened by 26.1% to US$ 2,623 million in the first quarter of this year, outpacing the 22% growth in net capital inflows and leading to a negative balance of payments of US$ 214 million.
The overall public finance deficit accounted for 24.7% of total expenditures, down from 31.9% in the same period of 2007. In. annualized terms, the deficit is estimated to stand at 8.5% of CUP. Cross public debt reached LP 64,965 billion, or USS 43.1 billion, at end-March 2008, up by 2.5% from end- 2007.
The banks’ total assets moved from LP 123,999 billion at year-end 2007 to 128,343 billion at end- March 200$, i.e. a healthy growth of 3.5%. The growth in assets was triggered by customer deposits which grew by LP 2,713 billion in the first quarter of 200$. The most outstanding growth performance pertains to total loans which grew by LP 3,070 billion in the first quarter of 2008, the equivalent of 10% in percentage terms.
The Beirut stock market index managed to report a slight growth of 2.7% over the first quarter of 2008. The average spread on Lebanese Eurobonds widened by 153 basis points to reach 611 basis points, as a result of the consecutive drop in the foreign yields driven by the easing policy in the United States.