Economists Survey: growth may jump to 2.5 percent in 2017

The Lebanese Economic Outlook is a set of key forecast based on the views of 17 leading local economists from banks, industry, and academia.
The Lebanese Economic Outlook is a set of key forecast based on the views of 17 leading local economists from banks, industry, and academia.
| Annahar | February 10, 2017 at 14:41

Beirut: The consensus among Lebanese economists is for growth to reach 2.5 percent in 2017, ahead of the IMF's forecast of 2 percent.

Economena Analytics, released Friday its Lebanese Economic Outlook (LEO), a set of key forecast based on the views of 17 leading Lebanese economists from banks, industry, and academia surveyed in the last half of January.

Economists were unanimous in their expectations of a rebound in tourist arrivals to Lebanon and to an increase in hotel occupancy rates. Twelve of 17 economists also predicted a significant increase in the number of tourists from the Gulf Cooperation Council. Lebanon's political ties with Saudi Arabia have improved in recent months, with the latter pledging to increase flights from the kingdom to Beirut and to lift travel warnings against its citizens vacationing in the country.

Tourist arrivals to Lebanon from most Western countries, including the United States, Canada, France, Germany, and Great Britain, had reached a record high in 2016, but tourist spending has remained subdued due to the fewer high-spending tourists from the Gulf.

In fact, all sectors of the economy are forecast to post positive growth in 2017, a remarkable reversal from 2016, led by an expected rebound in activity at restaurants and hotels. Even real estate and construction, which had weighed negatively on economists' outlook in early 2016, are now seen contributing positively to economic growth in 2017. Just one of the 17 economists predicted a decline in real estate transactions in 2017, while 11 economists said activity would rise during the year.

Remittances and exports, which had also weighed on growth prospects in 2016, are seen rebounding in 2017 amid rising oil prices and a possible improvement in conditions for transportation by land through Syria.

One of the most promising forecasts by economists is for a budget law to be approved this year. Twelve out of 17 respondents said Parliament will likely approve a budget law in 2017 for the first time since 2005.

Forecasters were divided over the possibility that Riad Salameh's term as Governor of the Central Bank would be renewed, with the outlook tilted towards a term extension. Salameh has been at the helm of Banque du Liban since 1993, with his tenure extended three times for consecutive six-year terms.

The majority of economists said Salameh, whose fourth term ends in July 2017, will likely be reappointed. However, eight economists said the extension is unlikely or uncertain, reflecting a lack of clear political guidance on the subject.

While optimistic about growth in 2017, economists were uncertain about the near-term prospects for oil and gas licensing and a Paris IV donor conference. Eleven of 17 economists expressed doubt that one or more oil and gas exploration contracts would be awarded during the year or that a Paris IV donor conference would take place in 2017.

LEO is an economic forecasting survey of the expectations of leading Lebanese economists on the performance of economic sectors and principal macroeconomic indicators. It is conducted by Economena Analytics.

The demand for sector-level forecasts has increased substantially in recent years, especially as insecurity in the region brings about elevated levels of uncertainty for investors and policymakers.

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