It’s no secret that Lebanon and Syria are intertwined politically, economically, and socially in ways that have become all the more evident since the war started raging in Syria more than two years ago.
A new study by the United Nations Economic and Social Commission for Western Asia, or ESCWA, shows just how related the two countries’ economies are–and what the likely impact on Lebanon will be if the war lasts for years.
One in four people in Lebanon these days is Syrian–a jarring fraction considering the country’s population of roughly 4 million surged 25% in just two years. Syrians fleeing the war flood the streets of most Lebanese cities and towns.
Refugees have crowded many impoverished villages that dot the border between the two countries, while well-to-do Syrians have driven up apartment rental prices across Lebanon. And Syrians have become a major competitor in Lebanon’s medium-and-low-wage job market, creating rising resentment among locals struggling to find jobs themselves and make ends meet.
According to the ESCWA study, there’s a positive correlation between economic growth in Lebanon and Syria. For every 1% increase in Syrian Gross Domestic Product, or GDP, there’s 0.2% growth in Lebanese GDP–and vice versa.
Until Syria embarked on an economic liberalization program several years ago, Lebanon was “a lung of the Syrian economy” and Syria was a large market for Lebanese goods, said Abdallah al-Dardari, ESCWA’s chief economist and Syria’s former deputy prime minister for economic affairs. In the years that followed, Syria remained a main land route for some of Lebanon’s biggest economic drivers–commerce, tourism, and foreign remittances. These were the major sectors affected–pillars of the Lebanese economy–when the war in Syria set in.
The study estimates that Syria lost between 35% and 40% of its GDP in the past two years, corresponding to about a 6% decline in GDP growth in Lebanon over the same period. If the war in Syria continued to 2015, the same study estimates a drop in Syrian GDP of up to 60%–and so a 12% decline in neighboring Lebanon.
But if the war were to end today, ESCWA research estimates the economy in Syria would surge 20% in the first post-war year. Growth in post-war reconstruction periods are usually very high. Mr. Dardari, presenting the findings of the study at a Lebanese think tank last week, even joked that Lebanon would have to brace for the eventuality that Syrian migrant laborers who are a backbone of the Lebanese construction industry would flood back into Syria.
For now, the rising refugee numbers in Lebanon are expected to continue to hamper economic growth. One of the study’s findings appears to suggest that absorbing Syrian refugees into the Lebanese labor market–making them into economic resources rather than just burdens–would be better for the economy. GDP per capita in Lebanon, the study finds, would decrease by 20% if the refugees aren’t absorbed by the labor market, compared to a decrease of 12.3% if they are absorbed into the market.
This particular finding is very controversial for Lebanon. The issue of employment for Palestinian refugees that have long lived in Lebanon is a major policy and human rights debate.
And already, many Lebanese have called on cracking down on fairly loose regulations that allow Syrians to open up small-to-medium sized businesses in the country. While that sector has gone largely unregulated for years, Syrians in Lebanon now say authorities have recently been cracking down on unlicensed Syrian businesses, in what appears to be a response to popular resentment.
Officials from Lebanon’s labor ministry say no rules have changed and that authorities are only moving against people that aren’t following regulations.
By Nour Malas
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