Lebanon’s economy to be weighed down by Gaza war: EBRD

According to the European Bank for Reconstruction and Development, geopolitical unrest is likely to force Lebanon’s economy to contract even further in 2024. This prediction was made on Thursday.

The EBRD forecast that Lebanon’s economy will shrink by one percent in 2024, significantly lowering its earlier estimate from May that the faltering economy would rise marginally.

The economic growth of neighboring countries has already been affected by Israel’s assault in Gaza, and violence is also getting worse in Lebanon.

“Any increase will undoubtedly hinder growth,” AFP was informed by Beata Javorcik, chief economist of the EBRD.

The bank stated in a research that since 2018, the nation, which is already dealing with challenging economic circumstances and extremely high inflation, has lost more than 40% of its GDP.

It stated that “political impasse and stagnant progress on critical reforms continued to hold back recovery.”

The Russian economy expanded by 4.7% in the first half of 2024 despite Russia’s conflict with Ukraine, as the value of its oil exports more than offset the negative effects of Western sanctions.

The bank stated, citing China as a major factor in the nation’s economic expansion, “the price of Russia’s oil exports is estimated to have increased by more than 10% year on year and trade with non-sanctioning economies has been strong.”

The EBRD revised up its May estimate by 1.1 percent to project a 3.6 percent growth rate for the entire year of 2024.

Javorcik, however, warned AFP that there are indications that the Russian economy is “overheating” and that “next year there will be a significant slowdown” in the nation’s growth.

Originally established in 1991 to assist countries that had been part of the Soviet Union in adopting free-market economies, the EBRD has subsequently expanded to include the Middle East and North Africa.

This year, the economies of the nations where the EBRD operates are predicted to increase by 2.8%, which is little less than the bank had previously predicted.

It puts this down to “a weaker outlook for advanced Europe, stagnating mining output in Kazakhstan and Uzbekistan, the ongoing conflict in Gaza and Lebanon and severe droughts in Morocco and Tunisia.”