Understanding the Lebanese Economy

arithma

Does anyone know how Lebanon survives-ish economically?
What kind of sources should I look for?

I always have this weird global-issue related anxieties, and I don't think it's too healthy. I already have my personal stuff to worry about and need nothing more. It's just weird when walking around, and I see everyone happy nilly. It's aggravating.

The following simplified scenario terrifies me: We're all importing goods from outside, and then trading it inside, some making a profit. Where does the seed money come from? Are we really all that dependent on just tourism and expat sending their families money?

Why is this not the number one issue that everyone talks about? Everyone is oblivious?
There does seem to be a lot of riches around, and I don't even want to start poking around to see how those are collected and centralised.

bermudapineapple

Lebanon is in debt like many other countries but surprisingly the economy isn't very weak. I know that the central bank buys Lebanese Liras at the end of every day stimulate demand for the currency and keep it from falling. We also have one of the biggest gold reserves so our money isn't just meaningless paper. I'm not sure exactly sure how our imports are dealt with. Perhaps the tourism income is bigger than we all anticipate?

rtp

There are two ways to solve a problem, you either fix it or learn to live with it. When a problem is outside your scope than you are bounded to take the later choice.

Life is chaos and not harmony. You can't control the world and you can't really control most things that happen in your life. When it comes to monetary system, i'm quite clueless. However, am pretty sure that for one to become rich you have to exploit people, drug business, sell weapons... you get the picture. Then those rich people open companies, mainly for fun which at the same time makes them more rich and create jobs. Ofcourse there are some lucky people who made money from currency boom/setback and real estate boom.

Well everybody vision to life is quite bounded by their small environment of family,friends, love, and ofcourse their pleasures. They know the world works and they don't care how it works. They know the sun will shine tomorrow and the earth will keep on spinning. If it doesn't effect "their" life then people don't care. Thats how people are. At least the majority. So from where the money is coming is no issue, they know they have a job and they know they are making money. Nobody cares how the monetary system works or what is the source of their income.

As you said, its not healthy getting too much worried about the world being stable, because it simply isn't. Its chaos. You have to accept the world for what it is and unburden yourself from the worries that you can't control or affect.

p.s: most people do drugs, that is why they look happy :P and because they can't perceive beyond themselves, as i said, 'look happy'

mesa177

Lebanon is mostly (and by mostly I mean about 85 to 90%) a service industry, not just tourism but health care and education. In fact, the education system is one of the best in the middle eastern region (mostly at university levels). In fact, in 2013, we were ranked as 5th out of 177 concerning math and science education and 10th overall in quality of education (I give the credit to the fact that most schools are seeking IB accreditation, fantastic move). We even rank 13th out of 144 when it comes to quality of school management. As for health care field, we are more advanced than most countries within the MEA region (in 2012's survey it ranked 8th out of 30). Our health care providers (especially nurses, physiotherapists, and orthotics/prosthetics professionals) are out-sought by the Gulf region, and they are hired abroad for consultations and working on adequately preparing their medical facilities (university labs, both in medical and orthotics/prosthetics departments, as well as hospitals). Our local biomedical and pharmaceutical companies export their products to that region. Yes, they have their own companies, but some of our companies show greater potential as well as experience when it comes to product selection. However, due to the recent taxes applied to importing medical products, we will see a great setback in that field.

Anyway, if you're really interested in this matter, maybe the The Global Information Technology Report 2013 might help you get a better idea about our country's current financial situation in the midst of the global economy.

Joe

Yes, our local production is low. Both agriculture and industry are heavily undermined, unfortunately. But remember that value isn't only goods. Just like mesa177 wrote, our economy is heavily based on services. On top of the industries mentioned above (tourism, healthcare and education) I will mention financial institutions like banks, insurances, private equity firms, ... That's what most of my friends seem to be doing now anyway.

I don't know the construction field well, but I know it employs a lot of people and Beirut looks like it's constantly under construction so there it goes. Construction doesn't just include the engineers and construction workers, but also all the satellite jobs like real estate, hosting (for lack of a better word. I mean the concierge taking care of your building), security firms, ...

There's an increasing number of programmers and tech firms creating value in software. That's a kind of industry, I guess. It used to be that software companies would either create a product or sell services around it. Now with the recent web craze and everything being hosted online, the separation between products and services is disappearing.

While weak, industry and agriculture are not completely overlooked. Paper, cardboard, cement are a few things that are produced locally. We may not have big agriculture fields like they do in the US, but you can get fresh fruits and vegetables no matter where you are; someone is planting and harvesting all this. Agriculture is more prevalent in rural areas.

For more details, maybe an economist can give us her opinion?

rolf

arithma wroteI always have this weird global-issue related anxieties, and I don't think it's too healthy. I already have my personal stuff to worry about and need nothing more. It's just weird when walking around, and I see everyone happy nilly. It's aggravating.

I think this is a typical thing about lebanon, these anxieties. There are many things you can find to make you anxious.
- Lebanon went to 15 years of civil war. Do we know why? Do we know what happened? And how did it end? I mean okay I know the facts, but why did it end?
- Many of the same politician who were leading militias during the war are still at high position. We still see the same faces. Souvenirs, anyone? Nothing wrong with that? Moving right along...
- 2006: Israeli bombing out of the blue, with no warning...
- There are many areas where the government has no authority. People go around waging machine guns, at seemingly random intervals in time...
- Fights related to the syrian conflict inside lebanon
- About 1 million syrian refugees are reported to have entered Lebanon in the last years. That's like 1/4 of the population.
- Wait, are we actually 4 millions or how much are we again?

I could go on and on and on, I'm sure you already spotted many things that I "missed". The point is, the anxiety-inducing uncertainities are just too numerous, and the pessimists many, which makes it seem like a daunting and futile task to address them. Instead, people probably resort to approximative empirical deduction (1 car bomb every 6 months, so that's less than, hmm what... 0.1 % chance to be caught in one? So It's not so dangerous, I'll just not go out too often) and try to live a normal life based on these.

The problem remains, so does the "low grade anxieties" which nevertheless slowly eat their way through the years. This is probably one of the major reasons why people emigrate, and causes a lot of negativity in those can't emigrate.

That is my analysis on the topic of uncertainity and anxiety related to the global situation in Lebanon. Unfortunately it does not address your question directly, but I hope it will be enough pertinent to be a positive contribution.

rolf

mesa177 wroteAs for health care field, we are more advanced than most countries within the MEA region (in 2012's survey it ranked 8th out of 30). Our health care providers (especially nurses, physiotherapists, and orthotics/prosthetics professionals) are out-sought by the Gulf region, and they are hired abroad for consultations and working on adequately preparing their medical facilities (university labs, both in medical and orthotics/prosthetics departments, as well as hospitals).

Hello mesa177. Thanks for your post.

I'm sure there are many good doctors, and many good facilities. The things is, at a global Lebanese level, the healthcare does not effectively seem very strictly regulated at all (like many things in Lebanon). I'm sure there are many rules and regulations, but what I mean is: are they applied everywhere? A handful of facilities with a good reputation do not represent the whole country. I also believe that it gets corrupt when you go "higher" and closer to government. How can healthcare thrive in such an environment?

Anyway, we both did not give any sources to support our claims, so I guess this will not be going anywhere conclusive. We could use some country-wide statistics here.

But I cannot stay silent when I read such things about healthcare in Lebanon, when in fact the situation is not always that great, and there are great areas of shadow, which makes what you said sound a little like marketing material (no offense meant).

In any case, regarding this matter, and the topic of the thread, I wish we all had more statistics and sources to base our discussion on!

arithma wroteWhat kind of sources should I look for?

I whish I could answer! Let me know if you come across something. There are probably books written by experts who might shed more light on this.

rahmu wroteI will mention financial institutions like banks, insurances, private equity firms, ... That's what most of my friends seem to be doing now anyway.

It makes sense, Lebanon looks like a financial haven when compared to banking and finance in Europe.
I would imagine that much of this money gets invested in some of the construction projects that you mentioned.

mesa177

rolf wrote
mesa177 wroteAs for health care field, we are more advanced than most countries within the MEA region (in 2012's survey it ranked 8th out of 30). Our health care providers (especially nurses, physiotherapists, and orthotics/prosthetics professionals) are out-sought by the Gulf region, and they are hired abroad for consultations and working on adequately preparing their medical facilities (university labs, both in medical and orthotics/prosthetics departments, as well as hospitals).
Hello mesa177. Thanks for your post.

I'm sure there are many good doctors, and many good facilities. The things is, at a global Lebanese level, the healthcare does not effectively seem very strictly regulated at all (like many things in Lebanon). I'm sure there are many rules and regulations, but what I mean is: are they applied everywhere? A handful of facilities with a good reputation do not represent the whole country. I also believe that it gets corrupt when you go "higher" and closer to government. How can healthcare thrive in such an environment?

Anyway, we both did not give any sources to support our claims, so I guess this will not be going anywhere conclusive.

But I cannot stay silent when I read such things about healthcare in Lebanon, when in fact the situation is not always that great, and there are great areas of shadow, which makes what you said sound a little like marketing material (no offense meant).

In any case, regarding this matter, and the topic of the thread, I wish we all had more statistics and sources to base our discussion on!

Hey rolf. Actually what I said about health care applies to the MENA region and this region alone, and that's what I was trying to avoid: confusion between global and regional aspects. Yes, globally we rank low (way way low), but compared to most countries in the Gulf region and Africa, we're doing quite well. We have a panel of foreign specialists who visits hospitals and medical centers on a 3-year basis. The ranks given are highly influential in budget-wise decision-making when it comes to the NSSF and aids given by the International Red Cross (aka the Belgian, Spanish and Norwegian aids). [Edit] Forgot to mention that any noticeable violations like improper disposal of contaminated needles and wastes or improper monitoring of radiation levels by the LAEC are fined... very substantial fines I might add (which could also explain some of the money in the sector with idiotic decisions like banning use of dry heat units for the sake of digitized sterilizers or mercury-based thermometers for the sake of digital ones). [/edit]

Actually, a lot of the smaller medical centers and hospitals are moving from fixer/developer film processors to CR machines in terms of processing medical images, as well as adopting server-based archiving systems to backing up these images. These systems don't even exist in Khortom's most renowned hospitals. Our maternity awareness programs concerning breast-feeding, vaccinations, etc... are doing quite well thanks to UN's efforts combined with the IRC's efforts. Further more, many of the medical labs are getting ISO certifications (namely the ISO 15189 and ISO 17025, not to be confused with the ISO 9001 which is only related to management). Yes, the system is not that great, but there is a good sense of control being applied here. More and more hospitals are being encouraged to start with preventive maintenance (PM) programs alongside the corrective maintenance (CM) to gain better ranking, but along the road they're realizing that it's better to pay for regular PM visits rather than CM costs. In addition, our percentage of expenditure on health care as percentage of GDP has increased from 6.3 in 2011 to 9.3 in 2012 (source: WHO's website and of course the WHO Global Health Expenditure Atlas for 2012). Although it isn't as high as the 12.4% in 1998, it's still higher than any country in the MENA region. Bottom line is someone's always paying in the health sector, and when someone's paying others are receiving... now who gets what remains questionable, but from my aspect medical companies are doing quite well, especially in the Bekaa region.

This is turning into a very interesting topic.

rolf

mesa177 wrote This is turning into a very interesting topic.

It is, but it would be hijacking the original topic!

Joe

Not exactly on topic, but still relevant: Executive Magazine's top 20 entrepreneurs for 2013.

user

Don't forget money we get from Lebanese abroad. Apparently it goes up to billions of dollars of transfers. And people who travel for work, then come back a decade later to get married and settle here.

rtp

rahmu wroteNot exactly on topic, but still relevant: Executive Magazine's top 20 entrepreneurs for 2013.

this list is lame, I know one of the these top entrepreneurs, and he recently became the CEO of the company that he won the title for

samer

Moderation note:
Disagreements are a good thing, it reflects diversity of opinions, which is generally good. It is unfortunate that this had to evolve into a series of personal attacks, which bring nothing but negativity to the table. The topic has been cleaned up.

xerxes

rolf wrote
Regardless of me, you're obviously thrash-talking, and you're the one who should have looked up the meaning of economy because you seem to be ignorant about that, and I don't know if you noticed but I did include a clickable link to the wikipedia definition in my last post, which I did look up myself before answering.

Why didn't you look it up yourself before posting, and base your reply on that. You must've noticed that there were several previous posts in the thread, and I doubt we were all posting about a thing that don't exist! This should have tipped you off.

This negativity pervades a lot in Lebanon, sadly, and it is not constructive criticism, but just thrashing things around (thanks for bringing up the expression) and I'm afraid it can bring up depression and negative feelings without really solving anything.

And yes, what you're doing is thrash talking the economy, I can not see how it's useless because it is not even criticism, and I did not mention it but it is even against forum rules because it's ranting.

xerxes wroteBTW, how come the Lebanese lira never fluctuate?
Because it's value is regulated by the Bank of Lebanon through exchanging reserves.

First of all, I do major in economy and i work in economy. And that is not your case, correct me if I am wrong.
Obviously, you know nothing about economy other than the wiki article (which) i saw and mentioned in my previous post.

You haven't replied or commented about any economic argument i came up with in my last post.

I don't know how to reply to your post. your stating your feelings about "DESCRIBING the reality of the Lebanese economy".
what I said is not criticism, in any way. its a simple "kind" description of our economy. if we can't at least point and state our problems how can we start solving it ?! by saying ooh no, lala we are not like that. we are educated and we are better than everyone else.

besides, I believe in this forum we have the right to say what we want without being offended especially by someone who has no clue about what he is talking about. Again, being constructive meaning we have to point out to our problems frankly. if anyone feels offended because he can't handle the truth then he should stay in his bubble and not trash talk others for being right.

rolf

samer wroteModeration note:
Disagreements are a good thing, it reflects diversity of opinions, which is generally good. It is unfortunate that this had to evolve into a series of personal attacks, which bring nothing but negativity to the table. The topic has been cleaned up.

If I did attack him personally, I did not intend to, I was initially attacking what he wrote, and I happen to feel strongly about statements such as the one he made.
It is unfortunate that it the discussion had to take that tone, yes.

xerxes

rolf wrote
samer wroteModeration note:
Disagreements are a good thing, it reflects diversity of opinions, which is generally good. It is unfortunate that this had to evolve into a series of personal attacks, which bring nothing but negativity to the table. The topic has been cleaned up.
I believe that I did not attack xerxes personally, I just attacked what he wrote, and I happen to feel strongly about it.
It is unfortunate that it the discussion had to take that tone, yes.

saying my talk is bullshit isn't attacking me ?!!! you are just attacking my words? and you call this constructive?
Thats weird

rolf

xerxes wrote
rolf wrote
samer wroteModeration note:
Disagreements are a good thing, it reflects diversity of opinions, which is generally good. It is unfortunate that this had to evolve into a series of personal attacks, which bring nothing but negativity to the table. The topic has been cleaned up.
I believe that I did not attack xerxes personally, I just attacked what he wrote, and I happen to feel strongly about it.
It is unfortunate that it the discussion had to take that tone, yes.
saying my talk is bullshit isn't attacking me ?!!! you are just attacking my words? and you call this constructive?
Thats weird

I edited my post. It was not my intention to attack you - if I did. If I believe that something is bullshit I say it and it has nothing to do if it's you talking it or someone else.
I wish I wouldn't have been harsh, but the language in your post set me off. I did try to explain why, in one of the posts that got deleted.

rolf

rtp wrote
rahmu wroteNot exactly on topic, but still relevant: Executive Magazine's top 20 entrepreneurs for 2013.
this list is lame, I know one of the these top entrepreneurs, and he recently became the CEO of the company that he won the title for

I'm not sure I understand what you mean by "became the CEO of the company that he won the title for" but I also thought this list was lame. Some numbers and facts are questionable, and it shouldn't be called "list of 20 top entrepreneurs" but more like "list of 20 entrepreneurs we'd like to talk about".

rtp

@rolf, the CEO was hired around 4 month ago and the company has been up for like 4 years.

rtwo2008

Interesting discussion, I'll try to weigh in a bit. I'm not an economist nor do I have any advanced knowledge in this. But I do live here and see the "result" of our economic policies. Unfortunately we cannot measure "lost opportunities", so even if we are growing by 3% and giving awards to our chief economists we could have had the potential to grow by 10% but squandered it because of their bad judgement.

Anyway, to answer the OP, the seed money comes from:
- Population is increasing, new people are being born, they will work domestically or internationally. That work could be in giving services or building physical structures etc...
- Our expats will exchange their work for money and send it back home.
- Our local workers will exchange their work for services or buildings to allow the below points (industry, agriculture, tourism, etc..) to prosper.
- Tourists come and spend their money
- We import 5$ worth of raw material, work on it, export it for 10$ (example)
- We plant in the ground 1$ worth of seeds, export the result for 3$ (example)

My opinion is that our system is heavily reliant on individual efforts instead of collective efforts. Nokia boosted Finland to such heights they wouldn't dreamed of if they worked individually like we do. Icelandic banks boosted their country to amazing heights as well (their population is only 300,000), though they did crash disastrously in 2008-2009 but market crashes don't happen often.

Our economy is extremely individualistic and conservative, we will always grow slowly (2-5%?) while other economies that are small as us are leaping forward in 2 digit numbers. We will be left behind.

Our conservative system saved us from the 2008 financial crash, but how much lost opportunity was there if we had taken risks even if we crashed eventually (which doesn't always happen anyway).
Quick example if someone didnt understand:
- conservative: 3% per year = 30% in 10 years. (rough rounded example)
- risky: 12% per year = 120% in 10 years, then crashed, let's say shrunk by a disastrous 60%: still grew by 48% (rough rounded example).