26 July 2010
BEIRUT: The International Monetary Fund (IMF) indicated that the banking, retail and wholesale trade, and telecommunications sectors were the main drivers of economic growth in Lebanon during the 1998-2008 period, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.
It noted that the private sector was the main engine of growth during the covered period. Retail and wholesale trade and construction drove growth in 2007-08, reflecting the expansion in consumption, tourism and real-estate activity, it said. The IMF analysis is based on the national accounts released by Lebanese authorities.
The IMF stated that real GDP grew by a cumulative 41 percent rate during the 1998-2008 period, with services contributing 30.6 percent of this growth, followed distantly by the public administration with 3.3 percent, construction with 2.5 percent, industry with 2.2 percent, and agriculture with 1.2 percent, while the energy and water sector had a negative contribution of -2.6 percent to GDP.
More specifically, the contribution of services to growth shows that trade grew by 9.4 percent over the covered period, followed by transport and communication with 6.9 percent, financial services with 4.8 percent, educational services with 2.3 percent, health services with 2.2 percent, business services with 2 percent, housing with 1.3 percent, hotels and restaurants with 1.5 percent, and personal services with 0.3 percent.
It noted, however, that the drivers of growth changed somewhat during the 2007-08 period, as retail and wholesale trade contributed 4.5 percent of GDP in 2008 and continued to be the main source of growth. But construction became the second largest growth driver with a share of 1.9 percent, followed by transport and communication with 0.8 percent, financial services with 0.7 percent, and agriculture with 0.6 percent. It noted that growth during the two-year period was mainly related to the development of shopping areas, the boom in residential and commercial construction activity, and the rise in the number of visitors from abroad and tourism activity.
In parallel, the IMF added that consumption grew by a cumulative 33.7 percent during the 1998-2008 period, constituting the largest contributor to growth on the demand side, and was followed by investments with a growth of 11.8 percent, while net exports posted negative growth of -4.6 percent during the covered period.
It said private consumption drove overall consumption trends with growth of 28.5 percent compared to just 5.1 percent for public consumption. It added that private investment grew by 14.8 percent, in contrast to a negative contribution of -3 percent in public investment.
It noted that private consumption continued to be strong, along with a high level of private investment, in 2007-08; while net exports had a negative contribution to growth and public investment continued to have no contribution.
It said that the negative public investment was due to the significant lack of public sector investment in infrastructure over the 11-year period, while the negative net exports reflect the persistently strong external imbalance, slow export growth, and the high level of imports.
The sectoral distribution of GDP shows that services account for 64.7 percent of GDP on average for the 1997-2008 period, followed by construction with 11 percent, public administration with 10.1 percent, industry with 9.3 percent, and agriculture with 7.1 percent.
The distribution of services shows trade accounted for 23.6 percent of GDP on average for the covered period, followed by educational services with 7.9 percent, transport and communication with 6.9 percent, financial services with 6.5 percent, housing with 5.8 percent, health services with 4.9 percent, business services with 3.1 percent, hotels and restaurants with 2.8 percent, personal services with 2.4 percent, and maintenance and repairing with 0.8 percent, while energy and water had a negative share of -0.4 percent since its value-added has been negative since 2005.
The IMF noted that only two sectors saw a significant rise of their share in total GDP, with the share of telecommunications increasing from 4.4 percent in 1997 to 8.2 percent in 2008 and that of the banking sector expanding from 5.6 percent in 1997 to 7.6 percent in 2008.
It added that the share of all other sectors either declined or stayed constant. It considered that these trends reflect the structural transformation of the economy, particularly the development of a relatively large telecom sector and the rise of the banking sector. It noted that during the past two years most of the changes in relative shares covered trade and construction, reflecting the strong growth of these two sectors. – The Daily Star
Copyright The Daily Star 2010.
