Beirut blast will almost double the depth of Lebanon's recession
The blast that tore into Beirut last week is set to almost double the severity of Lebanon's recession, according to the world's top finance industry group.
The Institute of International Finance (IIF) warned output will plunge by 24pc in 2020, a much deeper contraction than the 15pc predicted before the explosion rocked the capital.
The Lebanese economy had already been crippled by hyperinflation, a collapsing currency and the Covid-19 pandemic before the $7bn (£5.4bn) of damage caused around the city's port in the blast. Its government is on the brink of collapse as protesters vent their frustration at a regime mired in corruption and incompetence following the explosion that killed more than 200 people.
Garbis Iradian, the IIF’s chief economist for the Middle East and North Africa, warned it will deepen “its worst financial and economic crisis since its independence in 1943”.
Unemployment and poverty rates have reached “new heights” of 35pc and 50pc, respectively, and the under-fire government has “failed to make progress on reforms needed to unlock international financing”, he said. The destroyed Port of Beirut was used for 75pc of the country’s imports, meaning goods will depend on two much smaller ports, according to the IIF.
"The recent massive explosion in Beirut is calling additional attention to a pervasive culture of negligence, corruption, and complacency of the ruling class, which sunk the country into its worst economic and financial crisis," said Mr Iradian.
On Sunday, the International Monetary Fund’s chief Kristalina Georgieva promised to “redouble our efforts” as it laid out the reforms needed to revive its economy.
Lebanon had asked for IMF help after defaulting on its debt earlier this year but the bailout talks had stalled.
She said the lender of last resort had already “engaged intensely” with the government on addressing the crisis and urged Lebanese policymakers to “act decisively”.
“Commitment to these reforms will unlock billions of dollars for the benefit of the Lebanese people,” Ms Georgieva said.
