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Lebanon 2016 | ECONOMY | FOCUS: LEBANESE EXPORTS

Fighting the trade deficit has been a battle Lebanon has faced since its independence.

in The last two years, Lebanon has witnessed a significant scale up of its exporting capacities, both at the real value and the policymaking levels, despite years of stagnation. Based on Investment Development Authority of Lebanon (IDAL) figures, between 2014 and 2015 the country was able to reduce the trade deficit from USD17 billion to USD15 billion, with imports value plunging by 11.8%, despite their increase in volume by 1.6% in contrast to the previous year. Even though this responded to favorable foreign factors, such as the drop in oil prices that hammered the economies of Lebanon's trade partners in the Gulf, as well as the reduction in import prices due to currency devaluations of the euro and the Japanese yen against the dollar-pegged Lebanese pound, it also set a tougher panorama for Lebanese exports by lowering its competitiveness price wise. The question then moved on how to build momentum with a stumbling economy in the GCC and the EU—Lebanon's largest trading partners—while facilitating the export of Lebanese products with the highest added value possible. As prompt in its response capacity as usual, the central bank quickly moved to inject 3% of Lebanon's GDP (around USD1.2 billion) to stimulate the economy and finance the competitive advantages of Lebanese firms. The central bank also extended its credit lines to Lebanese banks in order to stimulate investment and consumption, and to add up to the strength of local SMEs, which make up for 90% of all businesses in Lebanon. On the other side, IDAL implemented a USD13 million subsidy fund to cover the costly transportation of Lebanese goods through sea freight and fix the cracks left by the closure of the Syrian border in Lebanon's exporting capacities. As Nabil Itani, Chairman of IDAL, told TBY, “It is IDAL's duty to look after the interests of Lebanese exporters, so we created the maritime bridge program to take all the goods through sea freight from the Beirut port and cover part of the expenses so our exporters could retain their competitive advantage." The revitalization of its trade doors and the higher competitiveness of its companies have also enhanced Lebanon to create a second impetus on its free trade agreement network. This year marks the end of the transitional period for the Lebanon-UE Association Agreement, a trade agreement that reached a record EUR6.9 billion at the end of 2014 and that offers Lebanese industrial and agricultural products free access to its most prominent trade partner. In 2015, the Euro Mediterranean Association Agreement and the European Free Trade Association (EFTA) also entered into effect and granted free access to four new European markets. Moreover, Lebanon is also part of the Greater Arab Free Trade Area (GAFTA) along with other 17 Arab states, which celebrates 10 years of full trade liberalization in 2016 and aims to become a customs union in the near future.