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Lebanon This Week 566

January 05, 2019
Lebanon This Week 566

Remittance Inflows to Lebanon* (US$m)
*in first half of each year

 

Source: Banque du Liban, Byblos Research

 

  • Remittance inflows to Lebanon at $3.6bn in first half of 2018
    Figures released by Banque du Liban show that expatriates' remittance inflows to Lebanon totaled $3.61bn in the first half of 2018, constituting an increase of 0.3% from $3.6bn in the first half of 2017 and a rise of 4.2% from $3.47bn in the second half of 2017. Remittance inflows to Lebanon reached $1.85bn in the first quarter of 2018, unchanged from the same quarter of 2017, while they totaled $1.76bn in the second quarter of 2018, up by 0.6% from the same quarter of 2017. The figures include workers' remittances and the compensation of employees, according to the World Bank's definition of remittances. Banque du Liban's figures are the only official data on remittance flows to and from Lebanon.

    In addition, remittance inflows to Lebanon in the first half of 2018 increased to their fourth highest semi-annual level between 2002 and 2018. Remittance inflows to the country averaged $3.56bn during the first half of each year between 2008 and 2018, and reached a high of $3.79bn in the first half of 2008. Overall, remittance inflows to Lebanon grew at a compound annual growth rate of -0.5% between the first half of 2008 and the same period of 2018.

    In parallel, remittance outflows from Lebanon amounted to $2.37bn in the first half of 2018, up by 11.2% from $2.13bn in the first half of 2017 and by 2.3% from $2.3bn in the second half of 2017. As such, net remittance inflows to Lebanon reached $1.24bn in the first half of 2018, their seventh highest level for the first half of a year since 2002, and increased by 8% from $1.14bn in the second half of 2017. They decreased by 15.5% from $1.46bn in the first half of 2017.
     

  • McKinsey recommends 160 initiatives to address economic challenges
    The Ministry of Economy & Trade issued the report that the Lebanese government commissioned from consulting firm McKinsey & Company titled "Lebanon Economic Vision", with quantifiable targets for 2025 and for 2035. The study identifies five economic sectors that present the highest economic potential for Lebanon, which are agriculture, industry, tourism, financial services, and the Knowledge Economy. It provides a list of 160 priority initiatives related to the five economic sectors, to the Lebanese Diaspora, and to government actions in infrastructure, public administration, fiscal policy and legislation to support the sectors.   

    The study allocates 15 initiatives to the agricultural sector in order to achieve a "high-value, high-quality" sector that generates "sustainable wealth" for farmers and rural communities. The initiatives aim to enhance yield and quality; to improve local food markets; to shift agricultural cultivation towards higher-value crops and livestock such as tomatoes and avocadoes; and to unlock export potential by facilitating access to international markets, among others. The study considers that the first phase, which consists of the highest priority initiatives, should focus on developing a regulatory framework to legalize the cultivation of cannabis for medicinal purposes, assuming that government policies are in place. 

    Further, the report assigns 12 initiatives to the industrial sector to transform Lebanon into a "niche regional leader in creative and high-value industries and a hub for regional processing". The initiatives aim to prioritize high potential sub-sectors, to develop National Integrated Industrial Parks and to improve access to finance, among others. According to the study, the highest priority initiative is to develop an industrial construction technology zone close to the northern border in order to capitalize on the reconstruction efforts in Syria. 

    In addition, the study earmarks 22 initiatives to the tourism sector, with a focus on business and specialized medical tourism. The initiatives focus on increasing the number of leisure visitors by building core offerings in Beirut, Byblos and Tyre, and by developing ultra-luxury "eco-tourism" hubs. They also aim to promote Lebanon as a "high value for money" destination for business tourists, as well as to position Lebanon as a "convenient" destination targeting regional medical tourists, among others. The highest priority initiative is to earmark about $14m for marketing Lebanon in 15 Arab countries, core European markets and the main countries of the Lebanese Diaspora; as well as to launch a national campaign to clean public beaches. 
     

  • Stock market index down 25% in 2018
    Figures released by the Beirut Stock Exchange (BSE) indicate that trading volume reached 90,109,683 shares in 2018, constituting an increase of 3.6% from 86,989,317 shares traded in 2017; while aggregate turnover amounted to $635m, down by 16.7% from a turnover of $762.1m in 2017. Market capitalization regressed by 15.7% from the end of 2017 to $9.68bn, with banking stocks accounting for 84.2% of the total, followed by real estate equities (12.1%), industrial shares (3.4%) and trading firms' equities (0.4%). The market liquidity ratio was 6.6% in 2018, nearly unchanged from 2017.

    Banking stocks accounted for 77.5% of the aggregate trading volume in 2018, followed by real estate equities with 20.1%, industrial shares with 2.1%, and trading stocks with 0.3%. Also, banking stocks represented 74% of the aggregate value of shares traded, followed by real estate equities with 21.6%, industrial stocks with 4.2% and trading stocks with 0.1%. The average daily traded volume for the period was 375,457 shares for an average daily value of $2.6m. The figures reflect an increase of 4.5% in average volume, and a decline of 16% in the average value in 2018. In parallel, the Capital Markets Authority's Market Value-Weighted Index for stocks traded on the BSE dropped by 25.1% in 2018, while the CMA's Banks Market Value-Weighted Index regressed by 27% last year.
     

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