BEIRUT - Lebanon’s dream of 2006 as a record year for economic growth has in the space of a week turned into a nightmare. Israeli air strikes have brought its fast-growing economy to an almost complete standstill. With thousands of nationals and foreign workers evacuating, and more than 500,000 internally displaced people, a bleak scenario confronts the country’s workforce.
“The direct losses are estimated to be nearly half a billion US dollars,” said Jihad Azoor, Lebanon’s Finance Minister. “But we have to read this number carefully because we have no way of assessing the situation fully to get an accurate estimate. And more losses occur by the hour.”
Azoor’s estimate is considered very conservative, with financial analysts doubling the figure. “We have suffered at least $1 billion-plus of physical damage,” says Nicolas Photiades, Head of Research at Beirut-based Blom Invest. “In addition, we have a huge social problem with thousands of homes being destroyed. All of this will need to be rebuilt eventually and will take time, which will add to the financial impact of these attacks.”
Photiades says morale among the Lebanese workforce is at an all-time low. Most non-essential employees are being asked not to come into work as their managers fear for their lives. Others, such as Photiades, are working half days but are struggling to motivate themselves.
“How can we develop strategies and business plans for the future when we don’t really know what the political situation will be?” he asks. “In the banking and investment sector, a cornerstone of the Lebanese economy, uncertainty is very significant in preventing foreign investment.”
Oil-rich Gulf countries have been central to the continued economic growth of Lebanon with huge investments that were expected to create thousands of jobs. Now, Photiades fears they will withdraw and with them will go many of Lebanon’s skilled workers.
“Morale is so low now, that even the most resilient people will be thinking of their future and their family’s future and whether they should stay in Lebanon or not,” laments Photiades. “We have had a ‘brain drain’ and youth drain here since 1975, but I think it will get a lot worse now. And it will be irreversible. This is a good time for European and Gulf countries to attract very skilled Lebanese workers.”
While the private sector paints a fairly gloomy picture of workers’ plight in Lebanon, the government is doing its best to stay optimistic. Aznoor said he was confident the Beirut Stock Exchange would re-open next week, following its closure on 14 July, two days after the beginning of the attacks.
The Lebanese government had expected the economy to grow by 4-5 percent this year, which would have been the highest rate in 14 years. Authorities had also expected about 1.6 million tourists, last recorded in 1976. Now, the tourists are going home and zero to negative growth is forecast for the rest of the year.
This item comes to you via IRIN, a UN humanitarian news and information service, but may not necessarily reflect the views of the United Nations or its agencies. All IRIN material may be reposted or reprinted free-of-charge; refer to the copyright page for conditions of use. IRIN is a project of the UN Office for the Coordination of Humanitarian Affairs.