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Lebanon This Week 553

September 22, 2018
Lebanon This Week 553

Non-Resident Capital Inflows to Lebanon (% of GDP)

Source: Institute of International Finance, Byblos Research

 

  • Non-resident capital inflows projected at $8.5bn in 2018
    The Institute of International Finance projected non-resident capital inflows to Lebanon at $8.5bn in 2018, which would constitute an increase of 2.4% from $8.3bn in 2017, compared to a peak of $15.6bn in 2009. Non-resident capital inflows to Lebanon would be the seventh highest among 14 countries in the Middle East & North Africa (MENA) region.

    The IIF indicated that Lebanon's projected non-resident capital inflows for 2018 include $3.2bn in portfolio investment, $2.9bn in other investment inflows, mainly banking-related flows, and $2.4bn in foreign direct investment (FDI). It anticipated other flows to grow by 15% (+$377.1m) from an estimated $2.5bn in 2017; for portfolio inflows to decrease by 2.5% (-$80.1m) from $3.23bn last year; and for FDI inflows to drop by 4% (-$101.5m) from $2.5bn in 2017. Non-resident capital inflows to Lebanon would account for 4.7% of total non-resident capital flows to MENA economies in 2018 and for 15.8% of total non-resident capital flows to the MENA region's oil importers. They would be equivalent to 14.8% of Lebanon's GDP in 2018 compared to 15.4% of GDP in 2017, and would represent the second highest level among the 14 MENA countries, behind Oman (19.4% of GDP).

    In comparison, non-resident capital inflows to Lebanon reached $8.3bn in 2017, and decreased by 29.8% from $11.8bn in 2016. They were the sixth highest among 14 countries in the MENA region in 2017. The decline in non-resident capital inflows to Lebanon last year reflected mainly a drop of $2.9bn, or 47.4%, in the inflows of portfolio investment, a decline of $537.2m, or 17.6%, in other investment flows, and a decrease of $68.3m, or 2.6%, in foreign direct investments. 
     

  • Lebanon ranks 140th globally, 11th in Arab world in government effectiveness
    The World Bank's annual World Governance Indicators for 2017 show that Lebanon's score improved on four out of six governance indicators included in the survey and regressed on two indicators, reflecting a relatively better level of governance in the country. Also, Lebanon's rankings improved on three indicators and regressed on two others, while it was unchanged on one indicator from the previous survey. The indicators cover 214 countries and territories and are rated on a scale of -2.5 to +2.5, with higher values corresponding to better governance outcomes. 

    Lebanon ranked in 140th place worldwide and in 11th place among 20 Arab countries in terms of Government Effectiveness. The indicator evaluates the quality of public and civil services and the degree of their independence from political pressure, as well as the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies. Lebanon's global rank regressed by four spots, while its regional rank was unchanged year-on-year. Globally, Lebanon had a more effective government than Uzbekistan, Uganda and Pakistan, and a less effective one than Ukraine, Bosnia & Herzegovina and Honduras among countries with a GDP of $10bn or more. The results show that 67% of countries and territories in the world have a better score than Lebanon on this dimension of governance.

    In parallel, Lebanon ranked in 178th place globally and in 15th place regionally on the Control of Corruption category, which measures the level of corruption in each country. Lebanon's global rank improved by two spots and its regional rank was unchanged year-on-year. Globally, Lebanon had a lower level of corruption than Guinea, Uganda and Madagascar, and a higher level than Mexico, Laos and Kenya. Regionally, Lebanon had a lower level of corruption than Iraq, Sudan, Syria, Libya and Yemen. The results show that 85% of countries and territories around the world had a better score than Lebanon on this dimension of governance. 
     

  • Net profits of health insurance providers down 27% to $15.6m in 2017, claims down 2% to $329m
    Figures released by the Insurance Control Commission show that the aggregate net profits of insurance companies active in the health insurance branch in Lebanon reached $15.6m in 2017, constituting a decline of 27% from $21.3m in 2016. The medical insurance segment posted a net profit margin of 3.5% in 2017 compared to 4.6% in 2016, and relative to a profit margin of 11% for the insurance sector. Health insurance covered 936,252 persons in 2017 through various medical plans that 36 health insurers offered in the market.

    Also, gross written premiums from the health insurance branch decreased by 1.1% to $454.4m in 2017, and accounted for 44.4% of non-life premiums and 30% of the insurance sector's aggregate premiums. The "group" health segment's written premiums reached $255.1m and accounted for 56.1% of the medical branch's aggregate premiums, while those of the "individual" health segment totaled $199.4m and accounted for 43.9% of the total. The medical insurance market is heavily concentrated, as the top five companies in the "group" health segment underwrote 64.8% of premiums for groups, while the top five insurers in the "individual" health segment underwrote 57% of health premiums for individuals in 2017. Overall, MEDGULF led all insurers with $67.4m in medical premiums in 2017 and accounted for 14.8% of the branch's aggregate premiums, followed by Bankers with $54.9m (12.1%), Continental Trust with $47.1m (10.4%), AXA Middle East with $43.7m (9.6%) and Allianz SNA with $41.9m (9.2%).

    Further, paid claims totaled $329.1m in 2017, constituting a decline of 1.8% from $335.3m in 2016. Gross claims paid from the "group" segment reached $216.2m and accounted for 65.7% of aggregate health claims in 2017, while those of the "individual" segment amounted to $112.9m and represented 34.3% of the total last year. The sector paid 1,481,161 claims in 2017, constituting a rise of 15.6% from 1,281,319 claims in 2016.
     

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