Assessing the Impact of the Economic and COVID-19 Crises in Lebanon
30 June 2020
Since October 2019, Lebanon has faced dramatic economic and socio-political challenges which led the country to default on its foreign debt for the very first time. The Government of Lebanon had to choose between debt repayment of $1.2bn Eurobond and providing essential goods and services to its population. While already suffering from the economic impact of the longstanding Syria conflict, Lebanon is also hosting the highest number of refugees per capita in the world, with over one fourth of the population (1-for-3 refugee to Lebanese population). Both refugees and local populations continue to feel the negative impacts of the protracted civil war in Syria, combined with recent steep economic deterioration.
The outbreak of COVID-19 is further contributing to the economic recession, compounding existing weaknesses and increasing vulnerabilities of all residents in Lebanon1. According to the Government of Lebanon, the country experienced a 10 percent contraction of GDP in the last quarter of 2019 and will face 14 percent and 4 percent negative growth in 2020 and 2021, respectively. The disease outbreak placed additional pressure on an already collapsing economic system and has overburdened national social safety nets and the health system. Existing poor social safety nets, limited coverage in water and electricity services, weak solid waste management/disposal and overcrowded living conditions in many parts of the country can augment the risk of the spread of the virus as observed in the past weeks. Combined with an economic collapse, this could push Lebanon into a food crisis as stated by the Prime Minister in May 2020.
The food security situation which has already been declining is now being further exacerbated due to movement restrictions, loss of income, and food and non-food price inflation. Prior to the COVID-19 outbreak, the World Bank had projected a significant increase in poverty levels among the Lebanese – from 30 percent up to 52 percent by end of 2020. As indicated by WFP, poverty levels among Syrian refugees are also estimated to have risen from 55 percent previously living below the extreme poverty line to 83 percent. Similarly, Palestinian refugees’ poverty figures are also expected to have increased. The combined impact of the COVID-19 outbreak and the economic freefall on people’s livelihoods is catastrophic, particularly for the most vulnerable among the Lebanese, Syrians and Palestinians, such as youth, daily workers, women-headed households, the elderly and people with specific needs.