- Consensus growth forecast for 2016 improved to 1.2% from 0.7% in January
- Bullish outlook for ICT, restaurants, and transportation, hotels to fare the worst
- Outlook for remittances improved since January 2016 survey
- Real estate price correction, not a crash in 2017
- No president expected in 2016
- Economists divided over the possibility of US sanctions
Beirut, Economena Analytics – 18 August 2016: Economena Analytics, a specialized economic data provider, released its Lebanese Economic Outlook (LEO) for the second half of 2016. Key forecast findings are based on the views of 17 leading Lebanese economists that showed an increase in their forecasts for economic growth in 2016 to 1.2% as of July 2016, up from 0.7% six months earlier.
ICT continued to top the list of sectors that are expected to outperform the economy in the coming year, followed by education and the manufacturing of food and beverages. Economists said they were more optimistic now than they were six months ago about activity in the transportation sector and at restaurants. All 17 survey participants said output in the transportation sector would steady or increase in the next 12 months.
On the other hand, forecasters turned more bearish on the hotel industry despite an expected continuation of the recovery in tourist arrivals. Prospects for hotels are now even less promising than real estate and construction, consensus survey results showed.
The negative impact on expatriate remittances from low oil prices appears to be more contained than previously thought. The consensus among surveyed economists is for remittances to remain flat over the next 12 months, compared with a negative outlook at the beginning of 2016.
In contrast, economists have become more pessimistic over real estate prices since the start of the year. Nearly 76% of surveyed economists expect real estate prices to drop in the next 12 months, but a majority of 65% said price declines in Beirut would be less than 20% in 2017 relative to 2016.
Furthermore, optimism in the January survey about the election of a President in 2016 faded by July. Just one in 17 economists said Lebanon would fill its top political post this year, down from 8 economists in the January survey.
Despite being largely in agreement over the prospects of presidential elections, economists were sharply divided over the possibility of a Lebanese financial institution being sanctioned by the US Treasury in 2016/17. Five economists said sanctions were likely, another five said they were unlikely, and the rest were uncertain. Respondents were similarly pessimistic over oil and gas exploration, with 9 in 17 saying that drilling licenses are unlikely to be awarded before end of 2017.
LEO is an economic forecasting survey of the expectations of leading Lebanese economists on the performance of economic sectors and principal macroeconomic indicators. It is conducted on a semi-annual basis by Economena Analytics and is available free of charge to the public through the Economena User Station at www.economena.com.
Demand for sector-level forecasts has increased substantially in recent years, especially as insecurity in the region brings about elevated levels of uncertainty for investors and policymakers. The LEO survey helps investors and business managers set strategies and manage risk using consensus views of Lebanon’s leading professional economists.