Lebanon: "comically turbulent"
Lebanon’s GDP grew during 2008, not at an annual rate of 7.5%, it seems, but at 9% or better. Yet even that trend-bucking number looks modest compared to other milestones scored by this small, almost comically turbulent country. Last year the value of deposits in Lebanese commercial banks rose by 15% to an impressive $94 billion, equal to 327% of GDP. Industrial exports surged 24%. Tax revenues, tourist arrivals, banking profits and the number of construction permits all soared by a third or more. A giant 46% leap in net capital inflows helped Lebanon post a record $3.5 billion surplus in its balance of payments, and boosted the Banque du Liban’s own reserves to a cosy $22 billion, nearly double its holdings a year ago.As is so often the case, thanks to Marginal Revolution for the pointer.
The ironic truth is that the country’s double curse, of chaotic internal politics and being located in a nasty neighbourhood, are proving helpful for a change. For one thing, they have made Lebanese bankers unusually wary and resourceful. Four years ago, for instance, the Banque du Liban’s stern and far-sighted head, Riad Salameh, banned any dealing in such tricky foreign instruments as mortgage-linked securities. And while banks, property developers and service vendors raked in business as private cash spilled out of the oil-enriched Gulf, competition between influence-seeking powers brought a windfall in aid for reconstruction following the ruinous 2006 war with Israel. Iran alone has injected perhaps $1 billion to rebuild the heavily bomb-damaged parts of Beirut run by its protégé militia, Hizbullah.