World Bank Warns of ‘Prolonged Depression’ in Lebanon

It said Lebanon should quickly form a reform-minded government to urgently carry out the reforms. The crash of the local currency has already led to triple-digit inflation. The dire projections by the World Bank, including a 19.2% drop in gross domestic product this year alone, come as Lebanon suffers its worst economic and financial crisis in its modern history, posing a threat to the country’s stability. The crisis began a year ago and worsened with the spread of coronavirus and the massive blast at Beirut’s port, which destroyed the facility, killed more than 200 people and caused widespread destruction. The World Bank report came a day before France and the U.N. are scheduled to host a new conference about aid to Beirut in the wake of its devastating port explosion, political deadlock and worsening economic crisis. French President Emmanuel Macron and U.N. Secretary-General Antonio Guterres will co-preside over the video conference, which will also include Lebanese nongovernmental groups and other organizations seeking to help. Lebanon’s government resigned days after the Aug. 4, blast, caused by the detonation of nearly 3,000 tons of ammonium nitrates that had been stored at a port warehouse for years. Former Prime Minister Saad Hariri has been trying to form a new government amid political bickering after he won majority backing from legislators to form a new Cabinet in late October. “Lack of effective policy action by authorities has subjected the economy to an arduous and prolonged depression,” the World Bank report said. “One year into the economic crisis, such policies have not yet been decided, let alone implemented. As a result, Lebanon’s economic crisis is likely to be both deeper and longer than most economic crises.” The economic and financial crisis that led to harsh capital controls by local banks and the drop of the local currency by nearly 80% is expected to drag more than half of Lebanon’s population into poverty. Source: Agencies