Our topic of discussion is the Lebanese economic crisis which started by end of year 2019 with a total collapse of the public sector services and the dramatical currency devaluation which continues till today where the lebanese lira devaluated by almost 20 times since the crisis started.
In this post, I will shed light on indicators that shows the lebanse economy collapse, starting with the Gross Dometic Product GDP per capita in US dollars which is used to present economical prosperity over time, before and after the crisis. Moreover, we will see additional indicators over 5 years period the % growth rate of inflation in consumer prices as well as the % growth rate in income per capita in US dollars over time.
Starting with a helicopter view first on the Global GDP per capita trend showing the economic prosperity variances between developed regions (US & Canada, Europe and Australia) compared to emerging regions (Asia, Africa, and South America) with the intention to analyze deeper the MENA region and more specifically how is Lebanon ranking today compared to neighboring countries, and what has changed in the last few years since the people revolution started in 2019 and how the economy collapsed over time. MENA region with majority of countries shows low GDP per capita except oil exporting Arabian Peninsula countries. This region is a clear example of having the extreme mix of countries with Qatar having the highest GDP per capita in year 2021 $ 64K which can also be considered the highest globally and Yemen the lowest GDP per capita $ 0.7K which is also among the lowest in the world. Unfortunately, Lebanon economical position has deteriorated over the last 3-5 years and its position in the MENA region dropped form being 10 out of 20 to 14 out of 16 and the GDP per capita went down from $ 7.6K before crisis to $ 2.6K after crisis with a negative CAGR over 5 years(2016 to 2021) of 19%.
Moving now to aditional economic indicators:
- Inflation growth rate % in consumer prices in Lebanon was close to zero in 2016 until 2019 when the crisis started, and we witnessed since then a significant spike in growth rate % reaching 155% in year 2021
- The net income per capita indicator showed also a decline starting 2016 going with single digit negative growth YOY and reaching a negative 20% in 2020 with the economic crisis
- Double hit on the Lebanese consumer with an increased inflation growth & decreased net income per capita adding huge burden and leading to higher poverty rate
Lat but not least, a complete solution is needed to help overcome the Lebanese economic crisis which started in 2019 with urgent reformations in the public sector offered services along with political corrections that need to be done ASAP. Listing some of the basic yet crucial solutions to start with:
- The foundation of the solution should start with overcoming political rivalries to allow cooperation between different parties
- Experienced crisis team to be identified and empowered by the government
- Serious discussions on government debt restructuring
- Identifying a solution for the banking sector, specifically the bank deposits
- Stabilizing the exchange rate of Lebanese Lira which has devaluated for more than 20 times since year 2019
For complete visualization please access below link on Tableau Public: https://public.tableau.com/shared/SS7B85S94?:display_count=n&:origin=viz_share_link
For additional details and comments please refer to the PPT file below: