Lebanon’s financial and economic crisis could rank as one of the world’s three most severe since the mid-19th century, concludes the latest Lebanon Economic Monitor released by the World Bank on Tuesday.
Lebanon’s descent into what could end up being one of the top three worst crises in 150 years has been stunningly swift. The country’s gross domestic product (GDP) – which measures the total output of goods and services – nosedived from close to $55bn in 2018 to an estimated $33bn last year, the report noted, with GDP per capital plummeting by around 40 percent.
“Such a brutal and rapid contraction is usually associated with conflicts or wars,” said the World Bank.
The report pulls no punches in its criticism of Lebanon’s political elites, accusing the country’s authorities of deliberately mounting an inadequate policy response to the country’s compounded crises including the rapid deterioration of economic and financial conditions, the COVID-19 pandemic and last year’s Port of Beirut explosion.
The inaction, says the report, is not due to lack of knowledge or quality advice, but rather the failure to agree on effective policy initiatives and a political consensus that defends “a bankrupt economic system, which benefited a few for so long”.
‘Catastrophic’ social impact
The report also did not mince words on the social fallout of the crisis, warning that the “dire” situation that has likely pushed more than half of the population below the poverty line could become “catastrophic”.
The decimated purchasing power of the Lebanese pound – which is how most working people in the country are compensated for their labour – has led to more than 40 percent of households reporting “challenges in accessing food and other basic needs”, according to a phone survey conducted by the United Nations’ World Food Programme at the end of last year.
Meanwhile, the nation’s unemployment rate spiked from 28 percent in February 2020 to nearly 40 percent by the end of the year.
“The dire socio-economic conditions risk systemic national failings with regional and potentially global consequences,” the World Bank warned.