th), and red with a green and brown cedar tree centered in the
white band

Economy

Economy - overview: The 1975-91 civil war seriously damaged Lebanon's
economic infrastructure, cut national output by half, and all but
ended Lebanon's position as a Middle Eastern entrepot and banking hub.
Peace has enabled the central government to restore control in Beirut,
begin collecting taxes, and regain access to key port and government
facilities. Economic recovery has been helped by a financially sound
banking system and resilient small- and medium-scale manufacturers,
with family remittances, banking services, manufactured and farm
exports, and international aid as the main sources of foreign
exchange. Lebanon's economy has made impressive gains since Prime
Minister HARIRI launched his $18 billion "Horizon 2000" reconstruction
program in 1993. Real GDP grew 8% in 1994 and 7% in 1995 before
Israel's Operation Grapes of Wrath in April 1996 stunted economic
activity. During 1992-96, annual inflation fell from more than 170% to
10%, and foreign exchange reserves jumped to more than $4 billion from
$1.4 billion. Burgeoning capital inflows have fueled foreign payments
surpluses, and the Lebanese pound has remained relatively stable.
Progress also has been made in rebuilding Lebanon's war-torn physical
and financial infrastructure. Solidere, a $2-billion firm, is managing
the reconstruction of Beirut's central business district, the stock
market reopened in January 1996, and international banks and insurance
companies are returning. The government nonetheless faces serious
challenges in the economic arena. The government has had to fund
reconstruction by tapping foreign exchange reserves and boosting
borrowing. The stalled peace process and ongoing violence in southern
Lebanon could spawn wider hostilities that would disrupt vital capital
inflows. Furthermore, the gap between rich and poor has widened since
HARIRI took office, sowing grassroots dissatisfaction over the skewed
distribution of reconstruction's benefits and leading the government
to shift its focus from rebuilding infrastructure to improving social
conditions.

GDP: purchasing power parity - $13 billion (1996 est.)

GDP - real growth rate: 3.5% (1996 est.)

GDP - per capita: purchasing power parity - $3,400 (1996 est.)

GDP - composition by sector:
agriculture: 13%
industry: 28%
services: 59% (1995 est.)

Inflation rate - consumer price index: 10% (1996 est.)