The World Bank released its Lebanon Economic Update report in which it estimated Lebanon’s economic growth at a positive 0.2% in 2023, the first such growth over the last five years, following a contraction of 0.6% in 2022, yet anticipated inflation to remain in triple digits at 231.3%. The World Bank attributed the positive economic growth to tourism, remittances and a stabilization in economic activity. The World Bank warned, however, that such tepid growth estimation is subject to a high degree of uncertainty, and assumes the political vacuum to reign in the remainder of the year. The World Bank commented that the vacuums Lebanon is experiencing at several levels (presidential, caretaker government, limited parliamentary action and interim Central bank governor) are hampering the progress towards achieving a comprehensive crisis resolution plan. As a result, the World Bank unveiled that the protraction of the crisis will cap the country’s growth potential as its physical, human, social, and institutional capital are being depleted. The report added that BDL’s foreign currency reserves are on a downward trajectory, standing at $8.57 billion, down by $22.4 billion since the onset of the crisis. Always in the same vein, the World Bank uncovered that Lebanon has also been depending on some limited external financing including the year 2021 Special Drawing Rights allocation by the IMF to finance critical imports such as medicine and wheat. The report commented that Lebanon was the country that experienced the highest food price inflation in Q1-2023 (350% nominal food price inflation), leading to a spike in poverty levels as a recent survey indicated that three out of five households considered themselves to be poor or very poor. The World Bank estimated Lebanon’s real GDP contraction at -0.6% in 2022, up from a previous estimate of a larger contraction of 2.6%. This lower contraction was supported by robust tourism and remittance activity which bolstered domestic consumption. In parallel, the report highlighted that public finances have deteriorated in 2022 with spending accelerating due to increased public servants costs, transfers to EDL and subsidies on wheat, and government revenues falling from 13.1% of GDP in 2020 to 6.1% in 2022 (one of the lowest globally). As a result, the fiscal deficit attained 2.9% of GDP compared to a fiscal surplus of 1.0% of GDP in 2021. In this regard, the World Bank commented that the interim Central Bank’s governor stance of not financing the fiscal deficit in the absence of any legal framework coupled with the government’s efforts to increase its revenues, would most likely yield a drop in the primary and fiscal deficits in 2023. The World Bank added that the exchange rate has somewhat stabilized in the parallel market at around the LBP 90,000/USD level, thanks to the interventions of the Central Bank, yet warned that these interventions will not be sustainable due to the depletion of BDL’s foreign currency reserves. The report commented that inflation remained high in 2022 (171.2%) and in July 2023 (251.5%), considered as one of the highest rates globally. The current account deficit rose dramatically to attain 32.7% of GDP in 2022, as imports rose to their pre-crisis levels of $19 billion, while exports fell. The World Bank, however, anticipated this deficit to shrink to 12.8% of GDP in 2023 in anticipation of lower imports of goods and services.