BrazilLebanon’s unemployment rate surges past 30% amid meltdown
Against a backdrop of what is the country’s worst economic crisis in history, Lebanon’s unemployment rate has surged past the 30% mark, according to the latest estimates from a Lebanese consulting firm.
Not so long ago one of the wealthiest countries in the Middle East, today Lebanon is technically one of the poorest. Estimates from the International Monetary Fund (IMF) place Lebanon as the third-highest indebted country in the world in terms of the ratio of debt-to-GDP, and notably, there is little hope the country will be able to repay its debts.
Ironically, the IMF is arguably the last lifeline the country has to rise from the ashes, however, continued internal political conflicts combined with an establishment riddled with corruption is threatening to derail vital bailout talks with the multilateral lender.
Meanwhile, according to the Financial Times, the country’s central bank is running out of options. Its own accumulated losses have spiralled to $49 billion, which equates to 91% of Lebanon’s total economic output in 2019 and is almost equal to the total of value of the deposits held by commercial banks at the Banque du Liban. In other words, the central bank has lost its monetary powers to “steer the economy”.
Lebanon’s central bank is led by Riad Salame, who is one of the world’s longest serving central bank governors having led the Banque du Liban for 27 years. But he is now facing major pressure to resign, pressured by politicians and demonstrators who believe he is backing the establishment in hindering the emergency financing Lebanon needs to stabilise its economy.
Making matters worse is the free fall of the country’s local currency, the Lebanese Lira. On Sunday, the Lebanese pound sold at a rate of 8,000 to the US dollar at local exchanges, losing about 80% of its value over the past 10 months. Many Lebanese earn their salary in local currency, while some of their expenses need to be paid in dollars (imported goods), meaning that much of their spending power has evaporated.
The accumulation of events has caused an unprecedented financial meltdown, and as mostly is the case, it are the people of the republic that are suffering most. A study by InfoPro Research, a local economics consultancy based in Beirut, found that one fifth of companies have ceased or suspended their operations since the beginning of 2019, half of which have shut down in the first five months of 2020.
This in turn has lifted the number of people out of unemployment to around 550,000, which equates to nearly one third of the total workforce of 1.8 million. 350,000 jobs have been lost since the start of the economic recession, adding to the pre-recession unemployment number of 200,000.
