World Economy

Lebanon Rating May be Downgraded

Lebanon Rating May be DowngradedLebanon Rating May be Downgraded

Economists have predicted a further downgrade of Lebanon’s sovereign credit rating in 2016, noting that the GDP growth could reach 0.7% this year.

Economena Analytics, said the key forecast findings are based on the views of 18 leading Lebanese economists, and show growth in 2016 is expected to slow to 0.72%, Albawaba reported.

It said the economic slowdown is mostly a consequence of deterioration in real estate and construction, despite a positive outlook for information technology, manufacturing, transport, retail and public spending.

“Weighing heavily on the economy is the deadlock in policymaking, especially with the expected failure of parliament to ratify the budget, and cabinet to approve two critical oil decrees,” the survey said.

But the economists stressed that a president is likely to be elected in 2016 after almost two years of failed attempts to fill the country’s top post.

“Given weakening public finances, particularly amid a widening fiscal deficit and a swelling public debt, eight of the 18 surveyed economists said they expect Lebanon’s sovereign credit ratings to be downgraded,” the report explained.

The report said 12 of 18 surveyed economists said a budget and the oil decrees are unlikely to be passed this year, and none saw a chance for a new salary scale bill to be ratified.

It added that the parliament has not passed a budget since 2005, a key demand by donor countries, while the oil decrees have been in limbo for over three years.

“The majority of economists had correctly predicted lack of progress on all three issues in the 2015 survey,” the report said.

It added that contrary to the IMF’s forecast of a slight pickup in economic activity to 2.5% in 2016, the consensus among Lebanese economists was for a slowdown in output growth to around 0.72%.

Seven of the 18 surveyed economists also forecast negative or no growth in 2016, up from 1 in 17 economists in the May 2015 survey.