The economy of Lebanon is witnessing a once-in-a-century collapse.
Amid hyperinflation and inconsistent power supplies following a massive explosion in Beirut last year, Lebanon may be witnessing one of the worst three economic depressions since the nineteenth century, according to the World Bank.
The organization explains:
Lebanon’s GDP plummeted from close to US$ 55 billion in 2018 to an estimated US$ 33 billion in 2020, with US$ GDP/ capita falling by around 40 percent. Such a brutal and rapid contraction is usually associated with conflicts or wars.
This illustrates the magnitude of the economic depression that the country is enduring, with sadly no clear turning point on the horizon, given the disastrous deliberate policy inaction.
The social impact of the crisis, which is already dire, could rapidly become catastrophic; more than half the population is likely below the national poverty line. Lebanon, with a history of civil war and conflicts, faces realistic threats to its already fragile social peace.
The Wall Street Journal adds:
Power outages have become so frequent that restaurants time their hours to the schedule of electricity from private generators. Brawls have erupted in supermarkets as shoppers rush to buy bread, sugar, and cooking oil before they run out or hyperinflation topping 400% for food puts the prices out of reach. Medical professionals have fled just as the pandemic hammers the country with a new wave of infections. Thefts are up 62% and murder rates are rising fast.
Combined with COVID-induced hardships, the Beirut explosion accelerated Lebanon’s economic decline. One hundred citizens died in the blast as 4,000 injured people flooded hospitals. Over 300,000 were left homeless after dozens of buildings collapsed or experienced severe damage.
Lebanese Prime Minister Hassan Diab and the rest of his advisers resigned amid widespread protests following the explosion: “I set out to combat corruption, but I discovered that corruption is bigger than the state… I declare today the resignation of this government. God bless Lebanon.”
Analysts warned that the disaster would plunge Lebanon into “failed state” status.
“Not only do we have an absence of government and a political vacuum, but we’re going to have a severe problem with the function of the state of Lebanon,” Lebanese American University political scientist Imad Salamey told The Wall Street Journal. “We are heading toward the unknown.”