en 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 the launch of "Horizon 2000," the
government's $20 billion 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 1992-98,
annual inflation fell from more than 100% to 5%, and foreign
exchange reserves jumped to more than $6 billion from $1.4 billion.
Burgeoning capital inflows have generated 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. It has had to fund reconstruction by tapping foreign exchange
reserves and boosting borrowing. Reducing the government budget
deficit is a major goal of the LAHUD government. The stalled peace
process and ongoing violence in southern Lebanon could lead to wider
hostilities that would disrupt vital capital inflows. Furthermore,
the gap between rich and poor has widened in the 1990's, resulting
in grassroots dissatisfaction over the skewed distribution of the
reconstruction's benefits and leading the government to shift its
focus from rebuilding infrastructure to improving living conditions.

GDP: purchasing power parity--$15.8 billion (1998 est.)

GDP--real growth rate: 3% (1998 est.)

GDP--per capita: purchasing power parity?$4,500 (1998 est.)

GDP--composition by sector: