According to a report released on Wednesday by Audi Bank, Lebanon saw a 57% rise in exports and an eight per cent increase in public spending during the first quarter compared with the same period in 2002. 

"The impact of the war against Iraq on domestic economic conditions was relatively mild and short lived, while the general environment continued to benefit from the support of the international community to Lebanon and the government structural adjustment efforts," said Audi.

Lebanon's strong export performance was matched by a 4.2% drop in imports, resulting in a 4.8% drop in the trade deficit from a year earlier.

The country's import-to-export coverage ratio during the first quarter stood at 21%, a post-war record high, according to Audi.

Lebanon has a large public debt

Positive trend

Helping the country's finances was a capital inflow of $3.5 billion, the bulk of which were funds pledged to Lebanon aimed at helping the country restructure its heavy debt load.

Lebanon's public debt is estimated at 180% of its $18 billion gross domestic product.

A decrease in the country's debt service rate and the government's fiscal adjustment policy helped public finances, according to Audi.

But the picture was "less shiny" on the level of private demand with private investment dropping 13% from a year earlier.

Audi said Lebanese bond and equity markets were helped by international ratings agency Standard and Poor's changing it's outlook on Lebanon from "stable" to "positive".

The bank forecast the positive trend in Lebanon's trade balance and balance of payments should continue throughout 2003.