Syrian crisis ‘boosts’ local production in Lebanon

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A man melts down scraps of aluminum at one of Beirut's smelting plants. Al-Akhbar/Haitham Moussawi

By: Mouhamad Wehbe

Published Wednesday, December 10, 2014

Customs statistics for the first 10 months of 2014 have shown a rise in the trade deficit reaching $14,660 million, which reflects a steady flow of imports to offset weak production. However, the statistics fail to show that the Syrian crisis has strengthened local production, especially food products and chemicals.

Lebanese exports have registered a decline of 18.6 percent from the beginning of this year until the end of October. Imports, on the other hand, showed a slower decline of 1.2 percent. These figures resulted in an increase in the trade deficit, which reached $14,660 million, compared to $14,230 million during the same period last year and $11,225 million at the end of October 2010. This implies that the deficit increased by $3,435 million in the past four years, due to an increase in imports by $2,779 million and a drop in exports estimated at $656 million.

According to Lebanese Customs statistics, metal products constituted the biggest share of exports at the end of October 2014, accounting for 24 percent of total exports, followed by electrical equipment at 11 percent, chemical products at 10 percent, food products at seven percent, and regular metals at 12 percent.

However, the past four years did not see any changes in the structure or quantitative distribution of imports across different sectors, contrary to the structure of imports that have started to adapt to current changes in consumer activity in some sectors. For example, metal products were the top imported commodity between 2009 and 2014, followed by electrical equipment. Chemical products, food products, and regular metals came in at third, fourth, and fifth with slight differences among them, which reflects the volatility of the local markets.

Despite the general decline registered in the overall value of exports, food products, cardboard and paper products, and chemical products have improved significantly. The share of food products was 8 percent in 2009, rising to 12 percent in 2013, and to 15 percent in 2014. Also, the share of chemical products rose from 7 percent in 2009 to 12 percent in 2014. However, the share of exported pearls and gemstones dropped from 31 percent in 2009 to 17 percent in 2014.

These figures indicate two things. The first is related to the effects of the Syrian crisis on economic activity in Lebanon in various ways. On one hand, large numbers of Syrians have taken refuge in Lebanon due to the ongoing fighting in their country. The presence of 1.5 million refugees, which are equivalent to 36.5 percent of the population of Lebanon, has led to an increase in local consumption rates. Thus, factories allocated a higher portion of their products for the local market, rather than for export, especially given the availability of funding for the extra demand. At the same time, this increase had a negative impact on other imported products, which are not classified as basic or necessary, or are necessary but unaffordable.

On the other hand, the crisis has weakened local production capabilities and strained distribution channels since Syria is the only land crossing between Lebanon and the Gulf countries, a main destination for Lebanese products.

Overall, export figures reflect a virtual weakness in the local production systems, which is due to a mix-up in the customs statistics between scrap products and industrial export commodities with added value. When the value of scrap products of diamond, gold, iron, and copper materials drops, the statistics reflect a virtual decline despite improved local production and the availability of more products in the local market.

This article is an edited translation from the Arabic Edition.

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