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HomeWorldLebanon economy shrugs off regional gloom

Lebanon economy shrugs off regional gloom

Lebanon is performing exceptionally well, given the global financial crisis.

Its new political stability is encouraging a tourism boom and keeping a normally buoyant real estate sector relatively stable.
But most of all, it is the Lebanese banks that are being seen as outperforming their regional and even international rivals.
Where other countries struggle with financial sectors that have been badly hit by the global financial crisis and banks that are exposed heavily to toxic assets, Lebanon’s banks have actually received a boost as a safe haven in times of crisis. This started right after the collapse of the American giant Lehman Brothers in September last year and is still continuing.

“Very little time after Lehman Brothers we started seeing a spectacular inflow of funds,” said Youssef el Khalil, the director of financial operations at Lebanon’s central bank. “It has slowed down somewhat but it is still going on now.”
He  gives three reasons for this phenomenon. First, most of the deposits came from Lebanese investors who had preferred to avoid putting their money in Lebanese banks because of the risk, instead preferring low-yield, low-risk destinations. When they saw these supposedly low-risk institutions collapse, they repatriated their money.

Second, despite recent political instability in Lebanon, Mr el Khalil said the banking sector had gained a reputation since the assassination of Rafic Hariri, the former prime minister, as being able to weather political problems.

And lastly, he said there was a perception “rightly or wrongly” that the international community would not let Lebanon fail.

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