Economic Research | Lebanon This Week | Lebanon This Week 579 | Non-resident capital inflows projected to increase by 20% to $8.4bn in 2019 with start of reforms | Lebanon | Byblos Bank

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Lebanon This Week 579

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Non-resident capital inflows projected to increase by 20% to $8.4bn in 2019 with start of reforms

The Institute of International Finance projected non-resident capital inflows to Lebanon at $8.4bn in 2019, which would constitute an increase of 20.4% from $7bn in 2018, compared to a peak of $15.6bn in 2009. Non-resident capital inflows to Lebanon would be the seventh highest among 15 countries in the Middle East & North Africa (MENA) region. 

The IIF indicated that Lebanon's projected non-resident capital inflows for 2019 include $4.6bn in other investment inflows, mainly banking-related flows, $2.6bn in foreign direct investment (FDI), and $1.2bn in portfolio inflows. It anticipated FDI inflows to decline by 10% (-$286.5m) in 2019 from $2.9bn in 2018, and portfolio inflows to decrease by 23.6% (-$386.9m) from $1.6bn last year, while it expected other investment flows to grow by 84% (+2.1bn) in 2019 from an estimated $2.5bn in 2018. Non-resident capital inflows to Lebanon would account for 4.2% of total non-resident capital flows to MENA economies in 2019 and for 21.4% of total non-resident capital flows to the MENA region's oil importers. They would be equivalent to 14% of Lebanon's GDP in 2019 compared to 12.5% of GDP in 2018, and would represent the second highest level among the 15 MENA countries, behind Qatar (19.5% of GDP).

The IIF considered that the gradual increase in capital inflows this year is contingent on the government's implementation of structural reforms and on significant fiscal consolidation. It expected most of the inflows to be mainly multilateral and bilateral loans from official sources. It also anticipated non-resident deposits at Lebanese banks to grow gradually due to high interest rates.
 
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