Around this time last year, business leaders representing the Economic Committees, a collection of representatives of the nation’s private sector companies, met with government officials to sound the alarm bells over a tanking economy. Their contention then was that leading economic indicators suggested the economy was in terrible shape, going so far as saying the country faced the worst risk of GDP contraction since 1989, near the end of the civil war, when Lebanon’s economy recorded a 0.8 percent drop.
One year on, the country is again facing grim economic prospects. The World Bank estimates that for 2014, Lebanon’s real GDP growth will reach only 1.5 percent, far below the growth rate of about 9 percent registered in 2009 and 2010, because of the volatile political environment in the country. The International Monetary Fund is forecasting only a 1 percent growth rate. Bank Audi also sounded the alarm in its recently issued quarterly report on the Lebanese economy, howling that “domestic political uncertainties with a continuously high level of domestic political bickering” and “the deterioration in macroeconomic fundamentals amidst accentuating fiscal and external imbalances” are leading to significant and tangible negative economic implications.
Consumer confidence is also in a miserable state. The Consumer Confidence Index, jointly produced by Byblos Bank and the American University of Beirut, plummeted to its fourth and second lowest scores ever in the last two quarters of 2013. Nassib Ghobril, chief economist at Byblos Bank Group, said in a statement coinciding with the publication, “continued domestic political volatility” and “failure to form a functional government to address citizens’ concerns, and a persistently uncertain outlook” were just a few of the main factors that affected the confidence of consumers during the second half of last year. Meanwhile, the country’s exports and imports have declined from $13.1 billion in the first half of 2013 to $11.9 billion in the same period this year — with industrial exports declining 29.3 percent.
Last year’s decision by Parliament to extend its term solved nothing. On the contrary, security in the country has remained unstable and, in some instances, grown worse. The 10 month vacuum at the cabinet level following the resignation of then-Prime Minister Najib Mikati only heightened the government’s impotence. It impacted economic confidence and the ability of the government to address pressing challenges of any kind, resulting in a meager 0.9 percent growth to the nation’s GDP — worse than the 1.6 percent growth in 2006 when Israel destroyed vast swathes of the country’s infrastructure and killed more than a thousand people.
These indicators are not only disastrous for the country as a whole, but for the business community in particular. Economic confidence is severely affected when government officials and Parliament consistently disregard the law and constitution, picking and choosing when it intersects with personal interests. And this is not to mention the glut of important economic issues that will be resolved if and only if a new political regime is settled. Among these are public sector wages, management of the refugee crisis and the oft-delayed oil and gas decrees.
Extending a dysfunctional parliament is not a viable solution — it merely prolongs the pain. And while elections are no guarantee of stability, they are far preferable to the current state of perpetual economic purgatory. Lebanon must get beyond elections so that leaders — whether in business or politics — can make the decisions that will return companies to profitability and reintroduce growth into the economy.
Civil society has thrown all its tomatoes, but protests have been ineffective. Media too has called on politicians to end their clownish performance, but to limited effect. Change must come from all parts of the society, and the business community is a strong, influential part of Lebanon’s fabric. So it again falls to business leaders who have a vested interest — bottom lines are being heavily affected — and who have the financial weight to make their voices heard.
The current batch of politicians acknowledge the deteriorating situation, yet remain infuriatingly loath to take action. The only way to break this impasse is electing a new president and holding fresh parliamentary elections. Just as they did last year, economic and business leaders must voice their need for governance and pressure politicians to face up to their responsibilities. Last year, the Economic Committees whimpered their disapproval. This year, they must roar.