Griselda 1

Seattle University

Market Analysis
Lebanon

Ivana Griselda
INBU 320
Fall 2013
Teresa Brosnan
10/24/2013

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Lebanon is a country located in the East Mediterranean, more precisely at the crossroads
of the Mediterranean Basin and the Arabian hinterland. The country is bordered by Syria on the
north and east sides and Israel on the south. Lebanon has a total area of 10,452 km2 or 4,036sq
mi. Beirut is the capital and the largest city of Lebanon. Though Arabic is the official national
language, majority of Lebanese people also speak French or English. Lebanon has several
religion and ethnic diversity the majority being Islam and Christian. Islam (Sunni and Shia)
makes up 54% of the total population and Christian contributes 41% of the population (Maronite
Church, Eastern Orthodox, Assyrian Church of the East). Ethnic groups in Lebanon are: Arabian
(95%), Armenian (4%), and others (1%). According to the 2013 data, Lebanons total population
is 4,131,583 (CIA, 2013). Majority of the population is Mhallmis population with hundred
thousands people, Arabian ranked second with thousands, and Jewish being a minority with only
thousands of people. Mhallmis are people who migrated from southeast and northeast of
Turkey-Syria. There are four distinct physiographic regions- the Lebanon mountain range, the
coastal plain, the Beqaa valley and the Anti-Lebanon Mountains. Coastal areas are rainy and cool
during winter and mostly hot and humid during summer. Lebanon also has a relatively high
annual rainfall compared to other African countries. 13.4% of the countrys area is covered by
large forests of cedar trees, which are used for planting several seeds such as wild almond, pine,
juniper, fir and oak.
Lebanon uses laissez-faire model as their economic system. It is a free market without
governments restrictions or restrictions on capital movement and foreign exchange. Main
businesses or sectors in Lebanon are primarily banking and tourism. Tourism has become a
major industry in the country, however, the war in neighborhood area has caused major damages
to the basic infrastructure, causing the tourism industry to suffer financially. Increasing number

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of tourist and private investment had made bank deposit grew rapidly from 7% to 8% in 2012. In
addition, foreign currency reserve had increased from $1 billion to $36 billion, as reported in
2012 (Bloomberg, 2013).
Having its economy primarily made up of service sectors such as tourism, financial
services and construction, service sectors contributed 70% to the countrys GDP. Lebanons slow
GDP growth of 2% in 2012 was caused by violence in its neighboring country-Syria- that
negatively impacted the countrys tourism sector. Nevertheless it was reported that in 2013,
Lebanons GDP is estimated to reach 2.5% (Baltaji, 2013). In August 2013 it was recorded that
the countrys inflation rate was 1.30%. Lebanon Inflation Rate from 2008 to 2013 is 4.20%.
Thanks to its strategic geographical location, free market and 15% corporate tax rate, Lebanon is
suitable for private investment.
All countries need trading partners to increase their export and import. Lebanons
primary trading partner is the EU, covering almost 32% of Lebanese trade. EU exports
machinery and transport equipment, energy products, and chemicals to Lebanon. EU also
imports agricultural products, mining products, chemicals and machinery and transport
equipment from Lebanon. The trade between Lebanon and the EU has been increasing for over
the past years, with an annual growth of 13.6% since 2008.
Political stability plays a great role in making investment decisions- the more stable the
political system, the less risk investors have to lose their money. Lebanon uses parliamentary
democracy as their political system. The system is based on the principle of separation, balance,
and cooperation of power. The legislative power is divided among 128 deputies, which are called
the Chamber of Deputies. Each of the deputies is elected by the citizens for four year terms. The

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executive power is submitted to the council of ministers, who creates the public policy and
system in accordance to the countrys laws. Affected by the influence of French mandate, the
government system chooses parliament seats based on 18 officially recognized sects. (htt1)The
people in Lebanon do not have any social services from the government, only the people with
connections to the ministers or the inside people got the benefits from the government.
(Fairbanks, 2013) According to Georgetown, this political condition makes the countrys political
environment less stable, since only people with connections are able to survive.
Lebanons political problems lie at its soil that had turned into a battleground for its
neighboring countries such as Israel, Syria, and Palestine. Since 1975 to 1990s, many foreign
powers have reign in the area. Outside interventions cause many civil wars and instability in the
Lebanon government system. To make condition worse, Lebanon is infamous for its Hezbollah
group- a group of religious people with Muslim background that reject Israel and the United
States (Fairbanks, 2013). The war in Syria and the major involvement of Hezbollah taint
Lebanons image with terrorisms. Car bombings and suicide bombs that become Hezbollahs
trademark are making the citizen and the tourists unsafe even in crowded public areas.
In conclusion, Lebanons current condition is not suitable for private investment. The
country safety is compromised by the recent war in Syria and the Hezbollah group that
constantly threatening foreigners with their bombing actions. At a glance, Lebanon has a good
economical condition, but only due to the supports it receives from its alliances such as the EU.
However, it is fairly impossible for the country to stand on its own feet and the economic
condition will rapidly deteriorate. Furthermore, the safety of the workers and the infrastructures
are not guaranteed. I strongly recommend to not invest on Lebanon for the next 5 to 10 years.

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Works Cited
(n.d.). Retrieved from
http://www.presidency.gov.lb/English/LebaneseSystem/Pages/OverviewOfTheLebaneseS
ystem.aspx
This articles talks about the infrastructure of political system, the effects of political instability of
investment.
(n.d.). Retrieved October 22, 2013, from http://www.tradingeconomics.com/lebanon/inflation-cpi
This article provides information of the inflation rate, CPI, and forecast of Lebanon. The graph
of the activity in certain year is clearly written down.
(2013, July 23). Retrieved October 21, 2013, from http://ec.europa.eu/trade/policy/countries-andregions/countries/lebanon/
This is the European Commissions website; it has details information about historical trading
partner between EU-Lebanon. It is very good and useful website because it has a very clear
statistic data and important information.
Baltaji, D. E. (2013, September 29). Bloomberg. Retrieved October 21, 2013, from
http://www.businessweek.com/news/2013-09-29/lebanon-s-salameh-says-he-expects2013-gdp-growth-at-2-percent-2-dot-5-percent
This article talks about the prediction of Lebanons GDP. It recruit government conference about
the prediction of economy in Lebanon.
CIA. (n.d.). Retrieved October 21, 2013, from https://www.cia.gov/library/publications/theworld-factbook/geos/le.html
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The data found in this article is reliable since it is the important agency in the United States. It
covers all the GDP, Religion, Ethic, Inflation, Economic System and many more. It is a useful
source for Lebanon.
Fairbanks, W. (2013, August 23). Georgetown. Retrieved October 22, 2013, from
http://journal.georgetown.edu/2013/08/23/view-from-beirut-failures-of-the-lebanesepolitical-system-by-waylon-fairbanks/
This journal talks about the political system in Lebanon. It has critical information about the
failures of the political system in Lebanon. It explains about different factors that affect the
failures and current condition of the political system.
Kwintessential. (n.d.). Retrieved October 21, 2013, from
http://www.kwintessential.co.uk/resources/global-etiquette/lebanon.html
The website provides information such as religion, culture, customs, ethnic makeup and
language of Lebanon.
Solh, R. E. (n.d.). Retrieved October 22, 2013, from
http://www.neweuropeaneconomy.com/home-mainmenu-51/fdi-mainmenu-59/416invest-in-lebanon
The authors of this article examine why it is good to invest in Lebanon. The articles describe
each benefit that the investors will get in the short run or in the long run. Also describes the
geographical situation in Lebanon, strategic sector and many other important information.

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