Economics & Policy articles

The Beirut effect

The Beirut effect

Reading Time: 7 minutes Those who predicted that the towering, luxury residential developments in the BCD and its immediate environs would become a sad testament to unbridled optimism and crushed potential had better think again. The war is over; long live the peace. So say the major developers, who are reporting that prices are holding. And while demand may

After the frenzy, what next for the GCC

Reading Time: 4 minutes We have spoken at great length, and on several occasions, in these pages about the Gulf capital markets and equities in particular. Twice, in the last quarter of 2005, we pointed to the excesses and overly euphoric market mood, especially in Saudi Arabia, where company valuations had reached astronomic and unsustainable levels. The mania subsided

Stockholm on our minds

Reading Time: 5 minutes The most surprising development in this conflict may actually be the most positive – the unprecedented support of the international community for Lebanon, its government, and its people. As economist Marwan Iskandar notes, “This is the first time in the history of Lebanon that the country had received this kind of money.” Although aid began

Industrial revolution blues

Reading Time: 4 minutes Although in many ways, industry was less affected by the month-long conflict with Israel than other sectors, it faces one of the most challenging recovery processes. Speaking with Executive in days leading up to the conference in Sweden, Lebanese industrialists emphasized the need for strong government support in rehabilitating the embattled sector. Mohammed Zeidan, the

There are still signs of life

Reading Time: 5 minutes The Economist Intelligence Unit (EIU) warned that, as a consequence of the recent conflict, Lebanon’s 2006 Gross Domestic Product (GDP) could shrink by some 10%, taking the national debt of almost $40 billion to twice the size of the country’s national income. The Lebanese Council for Development and Reconstruction (CDR) has stated that Lebanon sustained

Buying to the sound of cannons

Reading Time: 4 minutes Perhaps the most crucial elements of any capital market, especially an emerging market, are confidence and liquidity. During the devastating days of the conflict between Hizbullah and Israel, both took direct hits. Shortly after the start of the conflict, the Beirut Stock Exchange decided to close. This closure, though guided by pure reasoning was a

An uphill struggle at best

Reading Time: 4 minutes The July war had many similarities to the outbreak of the 1975 hostilities – most notably in how it began, with a political party dragging the nation into conflict – suggesting that 31 years and $45 billion of (unofficial) public debt later, not much has changed. Lebanon and its government were bypassed in the decision

A real future for Beirut’s financial center potential

Reading Time: 6 minutes During the 1960s and 1970s, Beirut was globally acknowledged as the banking center of the Middle East. Lebanese banks flourished and built up strong franchises by picking up petro-dollar deposits from Gulf investors – particularly after the 1973 oil crisis. Foreign banks increasingly chose Beirut as a regional hub. Beirut, with its cosmopolitan outlook, was

Lebanon must heed world bank warnings

Reading Time: 4 minutes While some of the indications of summer tourist activity in Lebanon are encouraging, we must never forget that our economy is structurally weak. The tourist season this summer could well be a stellar one, with some estimates reaching 1.6 million visitors. This is welcome news in view of the political quagmire and overall insecurity plaguing

Crude Reality

Reading Time: 2 minutes As tensions between Iran and the US have subsided somewhat, it may be time to revisit the crude oil market that monopolized so many headlines in recent weeks. While we rejected outright the claim that $100-a-barrel oil was around the corner, the geopolitical risk pushed oil briefly up to the mid-70s per barrel. Things have