Issue No. 621 - Credit Libanais · result of the sharp increase in short-term net debt inflows from a negative $14.3 billion in 2016 to a positive $297.2 billion in 2017, coupled

Issue No. 621

November 10 – November 16, 2018

LLEEBBAANNOONN NEWS

ECONOMIC INSIGHTS

> THE IMF PROJECTS LEBANON’S ECONOMIC GROWTH AT 1.0% IN 2018 1

> LEBANON’S EXTERNAL DEBT STOCK INCREASES BY 4.85% IN 2017 2

> NUMBER OF INDUSTRIAL DECISIONS UP BY 47.37% Y-O-Y TO 476 IN

H1-2018 3

> VALUE OF REAL ESTATE SALE TRANSACTIONS DOWN BY 18.95%

Y-O-Y BY OCTOBER 2018 4

> GROSS PUBLIC DEBT AT $83.84 BILLION AT END OF SEPTEMBER 2018 5

> CLEARED CHECKS VOLUME AT 9.92 MILLION YTD OCTOBER 2018 6

> FX RESERVES AT BDL REACH $41.48 BILLION AT MID-NOVEMBER

2018 7

> NEW CAR SALES SETTLE 8.73% LOWER BY OCTOBER 2018 8

> NUMBER OF BIA PASSENGERS UP BY 7% Y-O-Y BY OCTOBER 2018 9

> ABL AMENDS THE BRR ON LBP AND USD LENDING 10

MONETARY PERFORMANCE

> MONETARY AGGREGATES 11

> MONEY MARKETS 11

LEBANESE EQUITIES

> LEBANESE EQUITIES & CREDIT LIBANAIS INDICES 12

LEBANON'S ECONOMIC & FINANCIAL SECTOR INDICATORS 14

LEBANON'S RATINGS 15

THE IMF PROJECTS LEBANON’S

ECONOMIC GROWTH AT 1.0% IN 2018

The IMF projected Lebanon’s real

economic growth to slow from 1.5% in

the year 2017 to 1.0% in 2018 before

rebounding to 1.4% in 2019.

LEBANON’S EXTERNAL DEBT STOCK

INCREASES BY 4.85% IN 2017

Lebanon’s external debt stock grew by

4.85% y-o-y to almost $73.53 billion at

end of 2017, mainly driven by the 3.99%

appreciation in long-term external debt to

$64.49 billion, according to the World

Bank.

NUMBER OF INDUSTRIAL DECISIONS UP

BY 47.37% Y-O-Y TO 476 IN H1-

2018

Statistics released by the Ministry of

Industry convey a 47.37% annual rise in

the number of industrial decisions to 476

during the first half of the year 2018, up

from 323 in H1-2017 and 304 in H1-

2016.

VALUE OF REAL ESTATE SALE

TRANSACTIONS DOWN BY 18.95% Y-

O-Y BY OCTOBER 2018

The number of real estate transactions

dropped by 17.63% y-o-y to 49,652

during the first ten months of the current

year, with the value of transactions

plummeting by 18.95% to $6.61 billion.

GROSS PUBLIC DEBT AT $83.84

BILLION AT END OF SEPTEMBER 2018

Lebanon’s gross public debt widened by

$5.68 billion on an annual basis to $83.84

billion at end of September 2018, up from

$78.16 billion in September of last year.

TABLE OF CONTENTS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231

"ABL" Association of Banks in Lebanon "BDL" Banque Du Liban "BOP" Balance of Payment "BSE" Beirut Stock Exchange "CLASI" Credit Libanais Aggregate Stock Index

"CLFI" Credit Libanais Financial Sector Stock Index

"CLCI" Credit Libanais Construction Sector Stock Index "CPI" Consumer Price Index “EIU” Economist Intelligence Unit “EOY” End of Year "GDRs" Global Depositary Receipts "GDP" Gross Domestic Product "IMF" The International Monetary Fund "LBP" The Lebanese Pound "M1" Currency in Circulation + Demand

Deposits in LBP "M2" M1 + Other Deposits in LBP "M3" M2 + Deposits in Foreign Currencies "M4" M3+ Treasury Bills Held by Non-Banking System Including

Accrued Interests

"MENA" Middle East and North Africa

"MOF" The Lebanese Ministry of Finance

"Moody's" Moody's Investors Service "P/E" Price to Earnings Multiple "P/BV" Price to Book Multiple "PPI" Producer Price Index

"TEU" Twenty-Foot-Equivalent Unit

"USD" The United States Dollar "Y-O-Y" Year-on-Year "YTD" Year to Date "YTD Price Performance" Yield to Date Price Appreciation

“LE

“

SYNOPSIS OF TERMS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231

THE IMF PROJECTS LEBANON’S ECONOMIC GROWTH AT 1.0% IN 2018

The IMF released this week its “Regional Economic Outlook: Middle East and Central Asia - November 2018” report, anticipating a gradual acceleration in economic growth across the Middle East, North Africa,

Afghanistan, and Pakistan (MENAP) region from 2.2% in 2017 to 2.4% in 2018, 2.7% in 2019, and 3.0% by

2023. In detail, the report pointed to the positive repercussions of increased oil prices on the fiscal and external balances of MENAP oil exporting countries, which were accompanied by an improved non-oil activity across many of said countries. The IMF further cited various measures undertaken by some oil exporting nations to address any fiscal weaknesses, of which the introduction of the value-added tax (VAT) in Saudi Arabia and the United Arab Emirates (UAE). In parallel, and always according to the report, several country-specific factors

bolstered growth prospects for the GCC, such as the execution of public investment projects in Kuwait, infrastructure investment projects in Qatar for the FIFA 2022 World Cup it will be hosting, and the preparation works for Expo 2020 in the UAE. In this vein, the IMF foresaw an increase in growth across MENAP oil exporters from 1.2% in 2017 to 1.4% in 2018 and 2.0% in 2019. As for the downside risks faced by these countries, the report mentioned the prolonged geopolitical instabilities, the swelling international trade tensions, which might deter global economic growth and send oil prices into a tailspin, and any potential faster-than-expected tightening of financial conditions.

The report considered international trade tensions and the tightening of financial conditions as downside risks for MENAP oil importing countries as well, in addition to the volatility of financial markets such as the ones witnessed in Turkey. Concurrently, the report projected a relatively sluggish and “uneven” growth across MENAP oil importing countries during the upcoming couple of years despite a shy improvement, mainly strained by the impact of the increase in oil prices on their frail fiscal and external balances. In figures, the

IMF envisaged growth in MENAP oil importers to soar from 4.1% in 2017 to 4.5% in 2018 before receding to 4.0% in the year 2019. High unemployment and inequality were further listed as major challenges to MENAP oil importing countries. On a local basis, the IMF projected Lebanon’s real economic growth to slow from 1.5% in the year 2017 to 1.0% in 2018 before rebounding to 1.4% in 2019. According to the report, these relatively weak growth figures owe primarily to the repercussion of the prevailing regional political and security deadlock, especially in

neighboring Syria, on the country’s economic activity, trade, and investor confidence. This deadlock also resulted in a large influx of Syrian refugees to the country, which represent about 16% of the Lebanese population as of 2017, according to figures estimated by the United Nations High Commissioner for Refugees (UNHCR). Moreover, the report declared that “policy uncertainty” and “macroeconomic imbalances” contribute

to the country’s frail growth figures. From another standpoint, the IMF advised Lebanon to opt for fiscal consolidation in an endeavor to halt central bank financing and contain any resulting inflationary pressure. It projected, however, the impact of fiscal consolidation on the country’s public debt to be negligible, with debt

expected to remain above the vulnerability threshold for emerging countries. On a more positive note, the report mentioned that the unremittent inflow of remittances from the Lebanese diaspora should help maintain private consumption levels in the country. The IMF also praised Lebanon’s efforts in improving its governmental revenues by increasing its value-added tax (VAT). In the same context, the report underlined the issuance of some $5.5 billion Republic of Lebanon Eurobonds during the first half of the current year, attributing it to “favorable external financing conditions”.

LEBANON NEWS

Weekly Market Watch

SOURCE: IMF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 1

2015 2016 2017 2018P 2019P

Real GDP Growth (%)

MENAP Oil-Exporting Countries 2.0 5.8 1.2 1.4 2.0

MENAP Oil-Importing Countries 3.7 3.7 4.1 4.5 4.0

Lebanon 0.2 1.7 1.5 1.0 1.4

Inflation (%)

MENAP Oil-Exporting Countries 4.7 4.0 3.6 9.8 9.9

MENAP Oil-Importing Countries 6.5 7.5 14.4 10.3 10.3

Lebanon -3.7 -0.8 4.5 6.5 3.5

Current Account Balance (% of GDP)

MENAP Oil-Exporting Countries -3.8 -3.1 1.6 4.7 4.8

MENAP Oil-Importing Countries -4.3 -5.5 -6.6 -6.5 -6.1

Lebanon -18.3 -21.7 -22.8 -25.6 -25.5

Overall Fiscal Balance (% of GDP)

MENAP Oil-Exporting Countries -9.2 -10.4 -5.1 -1.6 -0.1

MENAP Oil-Importing Countries -7.1 -7.2 -6.3 -6.6 -6.3

Lebanon1 -7.5 -8.8 -6.0 -9.7 -10.5

1- Central Government, including transfers to Electricité Du Liban (EDL)

Source: IM F, Credit Libanais Economic Research Unit

LEBANON’S EXTERNAL DEBT STOCK INCREASES BY 4.85% IN 2017

The World Bank recently released its “International Debt Statistics 2019” (IDS 2019) report shedding light on the trends in external debt and financial flows (debt and equity) across 121 low and middle-income countries

during the year 2017. In details, the report unveiled that external debt stocks at low and middle-income

countries increased by 10% in 2017 to around $7.1 trillion (following some yearly exchange-rate adjustments in relation to the US Dollar), a much faster pace of growth than that registered in 2016 (4%). Concurrently, the report uncovered that the value of net debt inflows to aforementioned countries more than tripled during the year 2017 reaching $606.5 billion, up from $181.3 billion in 2016. This substantial rise comes mainly as a result of the sharp increase in short-term net debt inflows from a negative $14.3 billion in 2016 to a positive $297.2 billion in 2017, coupled with a 58.13% expansion in long-term net debt inflows to $309.3 billion. Furthermore, always according to the IDS 2019 report, foreign direct investment (FDI) inflows to concerned

countries declined for the second year in a row under the effect of global economic developments, falling by 3.3% in 2017 and settling at $454.1 billion. On the local front, the World Bank report revealed that net debt inflows to Lebanon widened by 16.63% on an annual basis to $3.23 billion in 2017, up from $2.77 billion in 2016. More specifically, these inflows are attributed to the rebound in flows of short-term debt from a negative $525 million reading in 2016 to a positive $909 million in 2017, outweighing the drop in long-term debt flows from $3.29 billion to $2.32 billion.

Lebanon’s external debt stock grew by 4.85% y-o-y to almost $73.53 billion at end of 2017, mainly driven by

the 3.99% appreciation in long-term external debt to $64.49 billion, up from $62.01 billion in 2016. As far as net equity inflows are concerned, FDI inflows to Lebanon shyly contracted during the past year, a trend that has been generally dominant since 2011, reaching $2.56 billion compared to $2.57 billion in 2016. According to the World Bank report, Lebanon’s total debt to exports ratio rose from 328.5% in 2016 to 341.3% in 2017. In contrast, the ratios of total debt to Gross National Income (GNI) and reserves to total debt narrowed from

144.0% and 61.8% in 2016 to 141.7% and 59.1% in 2017 respectively.

LEBANON NEWS

Weekly Market Watch

SOURCE: WORLD BANK, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 2

(USD Million) 2016 2017Y-O-Y %

Change

External Debt Stock 70,128 73,526 4.85%

Long-Term Debt 62,014 64,488 3.99%

Public and Publicly Guaranteed 27,612 29,899 8.28%

Private Non-guaranteed 34,402 34,589 0.54%

Short-Term Debt 7,854 8,764 11.59%

Use of IMF Credit 260 275 5.77%

Net Debt Inflows 2,766 3,226 16.63%

Long-Term 3,291 2,317 -29.60%

Short-Term -525 909 -273.14%

Equity Inflows

Foreign Direct Investment Flows 2,568 2,558 -0.39%

Portfolio Flows -135 -290 114.81%

Ratios

Total Debt to Exports 328.5% 341.3%

Total Debt to Gross National Income 144.0% 141.7%

Reserves to Total Debt 61.8% 59.1%

Source: World Bank, Credit Libanais Economic Research Unit

Lebanon's Main External Debt & Financial Flow Indicators

NUMBER OF INDUSTRIAL DECISIONS UP BY 47.37% Y-O-Y TO 476 IN H1-2018

Statistics released by the Ministry of Industry convey a 47.37% annual rise in the number of industrial

decisions to 476 during the first half of the year 2018, up from 323 in H1-2017 and 304 in H1-2016. The

Mount Lebanon region accounted for the lion’s share (44.75%) of industrial decisions issued in H1-2018, followed by the Bekaa (27.31%) and North (13.87%) regions. Furthermore, the statistics unveil that 29.20% of the industrial decisions was geared towards the establishment of new factories, while 18.49% was channeled for investment purposes. Sector-wise, the food products industry accounted for the bulk (31.09%) of industrial decisions issued during the first half of the current year, followed by the construction material (14.29%) and the mining and quarrying products (9.87%) industries. Finally, industrial decisions falling under

Category 3 represented 34.03% of issued industrial decisions in H1-2018, followed by Category 4 (32.77%) and Category 2 (26.05%), only to name a few.

LEBANON NEWS

Weekly Market Watch

SOURCE: THE LEBANESE MINISTRY OF INDUSTRY, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 3

Mount Lebanon Bekaa North South Nabatieh Beirut

213 130 66 39 21 7

Establishment Establishment & Investment Investment Warning/Settlement License Amendment Others

139 106 88 59 44 40

Food Products Construction Material Mining & Quarrying Products Chemical Products Wood & Furniture Others

148 68 47 34 22 157

Category 1 Category 2 Category 3 Category 4 Category 5

2 124 162 156 32Source: M inistry of Industry, Credit Libanais Economic Research Unit

By Region

By Sector

By Category

Breakdown of Industrial Decisions in H1-2018

By Type

300

350

400

450

500

H1-2015 H1-2016 H1-2017 H1-2018

357

304

323

476

Evolution of Number of Industrial Decisions

Source: Ministry of Industry, Credit Libanais Economic Research Unit

Category 10.42%

Category 226.05%

Category 334.03%

Category 432.77%

Category 56.72%

Breakdown of Industrial Decisions by Category

Mount Lebanon44.75%

Bekaa27.31%

North13.87%

South8.19%

Nabatieh4.41%

Beirut1.47%

Breakdown of Industrial Decisions by Region

Establishment29.20%

Establishment & Investment

22.27%

Investment 18.49%

Warning/Settlement12.39%

License Amendment

9.24%

Others8.40%

Breakdown of Industrial Decisions by Type

Food Products31.09%

Construction Material14.29%Mining &

Quarrying Products

9.87%

Chemical Products7.14%

Wood & Furniture4.62%

Others32.98%

Breakdown of Industrial Decisions by Sector

VALUE OF REAL ESTATE SALE TRANSACTIONS DOWN BY 18.95% Y-O-Y BY OCTOBER 2018

Activity in the Lebanese real estate sector continued to flourish for the second consecutive month, with the number of sale transactions rallying by 23.79% in the tenth month of the year to 6,389, up from 5,161

transactions in September. Similarly, the value of real estate transactions rose by 10.49% month-on-month to $0.77 billion, up from $0.69 billion in September. Conversely, the average value per transaction fell by 10.75% month-on-month to $120,154, from $134,624 a month earlier. On a cumulative basis, however, the

number of real estate transactions dropped by 17.63% y-o-y to 49,652 during the first ten months of the current year, from 60,276 transactions in the same period last year, with the value of transactions plummeting as well by 18.95% to $6.61 billion. The average value per transaction also decreased by 1.61% y-o-y to $133,108. It is worth noting that foreigners’ share of sale transactions rose to 1.92% by October 2018, from 1.85% in the full year 2017.

From a geographical standpoint, the average value per real estate transaction in the Beirut region remained almost flat at $516,401 YTD October 2018. In parallel, the average value per transaction in the Kesserwan

region soared by 15.93% to $158,789, up from $136,965 by the end of the previous year. On the other hand, the average value per transaction in each of the Metn and Baabda regions fell by 5.66% and 2.65% respectively to $204,101 and $133,461 as at end of October 2018, down from $216,337 and $137,093 at end of 2017.

LEBANON NEWS

Weekly Market Watch

SOURCE: GDLRC, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 4

Real Estate Transactions

For the Month

of September

2018

For the Month

of October

2018

Monthly %

Change

YTD

October

2017

YTD

October

2018

Y-O-Y %

Change

Number of Sale Transactions 5,161 6,389 23.79% 60,276 49,652 -17.63%

Value of Transactions (USD Billion) 0.69 0.77 10.49% 8.15 6.61 -18.95%

Average Value per Transaction (USD) 134,624 120,154 -10.75% 135,289 133,108 -1.61%

Source: General Directorate of Land Registry and Cadastre, Credit Libanais Economic Research Unit

Source: GDLRC, Credit Libanais Economic Research Unit

9.488.84

9.188.71 8.95

8.018.48

9.95

6.61

94,320

82,98474,569

69,198 70,72163,386 64,248

73,541

49,652

0.00

2.00

4.00

6.00

8.00

10.00

12.00

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2010 2011 2012 2013 2014 2015 2016 2017 YTDOctober

2018

$ Billion

Evolution of Value & Volume of Real Estate Transactions

Value of Transactions ($ Billion) Number of Transactions

2.04%1.84% 1.86% 1.85%

1.69%

2.20%

1.75%

1.85%

1.92%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

2010 2011 2012 2013 2014 2015 2016 2017 YTD

October

2018

Sales to Foreigners as a Percentage of Total Sales


$369,696

$456,136

$524,277

$499,948

$567,233

$509,841

$520,076

$516,485

$516,401

$153,064

$170,953

$182,797

$213,584

$210,955

$205,516

$213,312

$216,337

$204,101

$94,325

$97,487

$117,596

$124,664

$139,612

$140,169

$127,144

$136,965

$158,789

$103,397

$100,712

$108,028

$120,983

$138,644

$134,728

$146,400

$137,093

$133,461

$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000

2010

2011

2012

2013

2014

2015

2016

2017

YTD October 2018

Historical Evolution of Average Value per Transaction Across Different

Lebanese Regions

Baabda Kesserwan Metn Beirut


GROSS PUBLIC DEBT AT $83.84 BILLION AT END OF SEPTEMBER 2018

Lebanon’s gross public debt expanded by $146.60 million during the ninth month of the current year to $83.84 billion, up from $83.69 billion in August. On an annual basis, gross public debt widened by $5.68 billion when

benchmarked to the $78.16 billion reading recorded in September of last year. The share of the Lebanese banking sector of gross public debt decreased to 39.61% in September, down from 40.32% in August.

As far as debt in local currency is concerned, the latter rose by 0.21% both month-on-month and year-on-year to $48.43 billion. In addition, debt in foreign currency increased by 0.13% on a monthly basis and by 18.72% on a yearly basis to $35.41 billion. The share of debt in local currency widened to 57.76% of gross public debt in September 2018 (from 57.75% in August), while that in foreign currency narrowed to 42.24% (from 42.25% in August). Net public debt, which factors out public sector deposits, came in 8.27% higher on a yearly basis at $73.63

billion in September of the current year, noting that public sector deposits added 0.56% to $10.21 billion.

The compounded annual growth rate in Lebanon’s net public debt stood at 7.04% over the September 2011 – September 2018 period, as captured by the chart below:

LEBANON NEWS

Weekly Market Watch

SOURCE: ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 5

September-

2017

September-

2018Y-O-Y % Change

Gross Public Debt 78.16 83.84 7.27%

Debt in LBP 48.33 48.43 0.21%

Debt in Foreign Currency 29.83 35.41 18.72%

Public Sector Deposits 10.16 10.21 0.56%

Net Public Debt 68.00 73.63 8.27%

Public Debt (USD Billion)

Source: The Association of Banks in Lebanon, Credit Libanais Economic Research Unit

Debt in LBP

57.76%

Debt in Foreign

Currency42.24%

Composition of Gross Public Debt

in September 2018

Source: ABL, Credit Libanais Economic Research Unit

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Sep-2011 Sep-2012 Sep-2013 Sep-2014 Sep-2015 Sep-2016 Sep-2017 Sep-2018

45.73 47.1850.68

54.67

58.9762.54

68.00

73.63

Billions of USD

Evolution of Net Public Debt


CLEARED CHECKS VOLUME AT 9.92 MILLION YTD OCTOBER 2018

According to ABL statistics, the value of cleared checks fell by 1.23% year-on-year to LBP 84,021 billion

(distributed over 9,924,920 checks) in the ten-month period ended October 2018, in comparison with LBP

85,067 billion (allocated over 10,130,914 checks) in the same period last year. Of the total value of cleared checks, 67.28% was denominated in foreign currency, versus 68.70% a year before. On the other hand, the value of returned checks widened by LBP 240 billion (13.64%) on an annual basis to LBP 1,999 billion YTD October 2018, with the number of returned checks rallying by 20.02% y-o-y to 228,661. This is further illustrated in the section below:

The number of returned checks expressed as a percentage of the total number of cleared checks rose to 2.30% by end of October, up from 1.88% a year before. Concurrently, the value of returned checks calculated as a percentage of the total cleared checks value increased to 2.38%, up from 2.07% in the first ten months of the previous year.

LEBANON NEWS

Weekly Market Watch


Billion Number Billion Number Value Volume

Cleared Checks-LBP Denominated LBP 26,627 3,774,069 LBP 27,490 3,891,829 3.24% 3.12%

Returned Checks-LBP Denominated LBP 412 63,550 LBP 458 79,910 11.17% 25.74%

Cleared Checks-Foreign Currency Denominated $38.8 6,356,845 $37.5 6,033,091 -3.25% -5.09%

Returned Checks-Foreign Currency Denominated $0.89 126,964 $1.02 148,751 14.43% 17.16%

Total Cleared Checks LBP 85,067 10,130,914 LBP 84,021 9,924,920 -1.23% -2.03%

Total Returned Checks LBP 1,759 190,514 LBP 1,999 228,661 13.64% 20.02%

Cumulative Check Clearing Activity

October 2017 October 2018 Y-O-Y % Change

Source: Association of Banks in Lebanon, Credit Libanais Economic Research Unit

LBP-Denominated,

32.72%

Foreign Currency-

Denominated, 67.28%

Breakdown of Clearing Activity by Value


LBP-Denominated

39.21%

Foreign Currency-

Denominated60.79%

Breakdown of Clearing Activity by Volume


2.07%

1.55%

2.31%2.38%

1.67%

2.73%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Total LBP FC

Returned Checks as a Percentage of Cleared Checks

(Value)

YTD October 2017 YTD October 2018


1.88%1.68%

2.00%

2.30%

2.05%

2.47%

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Total LBP FC

Returned Checks as a Percentage of Cleared Checks

(Number)

YTD October 2017 YTD October 2018


FX RESERVES AT BDL REACH $41.48 BILLION AT MID-NOVEMBER 2018

The Lebanese Central Bank’s balance sheet revealed some $1.67 billion drop in the foreign assets (foreign currency reserves) portfolio during the first half of November 2018 to $41.48 billion, down from $43.15 billion

a fortnight ago. Concurrently, the value of gold reserves at BDL depreciated by $75.99 million on a bi-weekly basis to $11.16 billion following a stronger dollar as the U.S. Federal Reserve indicated that it will continue to raise interest rates.

On an annual basis, foreign assets at BDL came in 2.80% ($1.20 billion) lower than the $42.68 billion reading reported as at mid-November 2017. Similarly, the value of gold reserves fell by about 5.85% ($0.69 billion) when benchmarked to the $11.86 billion figure recorded in the same period last year. Overall, total reserves (foreign currency and gold) at BDL receded by $1.89 billion annually to $52.65 billion at mid-November of this year, down from $54.54 billion a year earlier. These reserves cover some 110 months of debt service, constitute around 62.79% and 71.51% of Lebanon’s gross and net public debt on a respective basis, and can

finance some 27 months of imports.

In a related note, BDL’s balance sheet widened by $1.60 billion during the first half of November to $139.57 billion. This mainly comes as a result of the 5.00% expansion in loans to the local financial sector to $30.76

billion, the 4.84% increase in BDL’s securities portfolio to $30.81 billion, and the 1.89% rise in the value of other assets to $25.13 billion, which altogether outweighed the 3.20% contraction in the value of total

reserves to $52.65 billion and the 4.34% drop in BDL’s fixed assets to $0.23 billion.

The share of gold & foreign currency reserves at BDL narrowed to 37.72% of the latter’s total assets by mid-November 2018, down from 39.42% two weeks earlier and 46.43% at mid-November of the previous year.

LEBANON NEWS

Weekly Market Watch

SOURCE: BDL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 7

$ BillionMid-

November

Mid-

November

Mid-

November

Mid-

November

Mid-

November

Mid-

November

Mid-

November

Gold 15.89 11.82 10.65 10.00 11.31 11.86 11.16

Foreign Assets 34.88 35.42 38.77 38.49 40.57 42.68 41.48

Total Reserves 50.77 47.24 49.42 48.49 51.88 54.54 52.65

Source: Banque Du Liban, Credit Libanais Economic Research Unit

Total Reserves

As a % of Gross Public Debt (1) 62.79%

As a % of Net Public Debt (1) 71.51%

In Months of Debt Service (2) 109.65

In Months of Imports (3) 26.86

(3) As at End of August 2018

Source: MOF, ABL, Credit Libanais Economic Research Unit

(2) Average Monthly Debt Service as at End of June 2018

(1) As at End of September 2018

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

Mid-November2012

Mid-November2013

Mid-November2014

Mid-November2015

Mid-November2016

Mid-November2017

Mid-November2018

15.89

11.82 10.65 10.00 11.31 11.8611.16

34.8835.42

38.77 38.49

40.5742.68

41.48

Evolution of Total Reserves at Banque Du Liban

Gold Foreign Assets


USD Billion

$ BillionMid-November

2017

End of October

2018

Mid-November

2018

Bi-Weekly (%

Change)

Y-O-Y

(% Change)

Total Reserves 54.54 54.39 52.65 -3.20% -3.47%

Securities Portfolio 28.70 29.38 30.81 4.84% 7.33%

Loans to Public Sector 0.00 0.00 0.00 0.00% 0.00%

Loans to Local Financial Sector 11.53 29.29 30.76 5.00% 166.69%

Valuation Adjustment 0.00 0.00 0.00 0.00% 0.00%

Other Assets 22.44 24.66 25.13 1.89% 11.96%

Fixed Assets 0.24 0.24 0.23 -4.34% -0.91%

Total Assets 117.45 137.97 139.57 1.16% 18.84%

Currency in Circulation Outside BDL 3.57 3.67 3.67 -0.03% 2.70%

Financial Sector Deposits 94.89 115.76 116.99 1.06% 23.29%

Public Sector Deposits 6.08 5.44 5.80 6.63% -4.56%

Valuation Adjustment 6.36 5.74 5.67 -1.21% -10.79%

Other Liabilities 2.99 3.72 3.80 2.28% 27.13%

Capital Accounts 3.56 3.64 3.64 0.00% 2.08%

Total Liabilities 117.45 137.97 139.57 1.16% 18.84%


Total Reserves37.72%

Securities Portfolio22.07%

Loans to Public Sector0.00%

Loans to Local Financial Sector

0.00%

Valuation Adjustment

22.04%

Other Assets18.00%

Fixed Assets0.17%

Breakdown of BDL's Balance Sheet as at Mid-November 2018

Source: BDL, Credit Libanais Economic Research Unit

NEW CAR SALES SETTLE 8.73% LOWER BY OCTOBER 2018

According to the monthly statistics published by the Automobile Importers Association (AIA), new car sales in Lebanon stood at 2,509 vehicles during the month of October 2018, compared to 2,436 vehicles in September

and 3,390 vehicles in October 2017. On a cumulative basis, new car sales fell by 8.73% y-o-y to 28,589

vehicles by the end of the first ten months of the current year, down from 31,324 vehicles during that same period last year. This comes as a result of the 22.13% annual slump in the sales of Korean cars to 8,221, coupled with some 10.13% sharp contraction in the sales of European cars to 5,563 vehicles, a 5.71% drop in the sales of American cars to 2,343 vehicles, and a 0.17% decrease in the sales of Japanese cars to 11,652 vehicles, which altogether outweighed the 93.32% rally in the sales of Chinese cars to 810 vehicles. It is worth noting that the number of imported cars via the Beirut Port had plunged by 34.13% annually in the first nine

months of 2018. Japanese cars controlled the lion’s share of new car sales in Lebanon, amassing alone 40.76% of total unit sales by end of October 2018, followed by Korean (28.76%), European (19.46%), American (8.20%), and Chinese (2.83%) cars.

The Korean “KIA” brand recorded total unit sales of 4,458 cars in the first ten months of 2018, enjoying the highest market share of 15.59%, followed by the Korean “Hyundai” (3,740 cars <13.08%>) and Japanese “Toyota” (3,687 cars <12.90%>) brands, only to name a few.

LEBANON NEWS

Weekly Market Watch

SOURCE: AIA, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 8

Oct-2017 Oct-2018 % Change

Japanese 11,672 11,652 -0.17%

European 6,190 5,563 -10.13%

Korean 10,558 8,221 -22.13%

American 2,485 2,343 -5.71%

Chinese 419 810 93.32%

Total 31,324 28,589 -8.73%

New Car Sales During the Ten-Month Period Ending

Source: AIA, Credit Libanais Economic Research Unit

Japanese, 40.76%

European , 19.46%

Korean, 28.76%

American, 8.20%

Chinese, 2.83%

Breakdown of New Car Sales up to October 2018


- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

KIA

Hyundai

Toyota

Nissan

Suzuki

Chevrolet

Renault

Mitsubishi

Honda

Mercedes

4,458

3,740

3,687

3,415

1,335

1,330

1,225

924

777

734

Top 10 New Car Sales by Brand up to October 2018


NUMBER OF BIA PASSENGERS UP BY 7% Y-O-Y BY OCTOBER 2018

The number of passengers travelling via the Beirut International Airport (BIA) rose by 7.41% on an annual

basis to 7,535,956 during the first ten months of 2018, up from 7,016,219 passengers during that same

period last year. More specifically, the number of arriving travelers soared by 7.97% y-o-y to 3,762,009, with the number of departing travelers rallying by 6.87% to 3,770,094. Nonetheless, the number of transit travelers plunged by 8.87% on a yearly basis to 3,853, while the number of flights edged 3.86% higher to 62,435. This is further sketched in the table below:

LEBANON NEWS

Weekly Market Watch

SOURCE: BIA, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 9

Beirut International

Airport Oct-2017 Oct-2018 % Change

Total Passengers 7,016,219 7,535,956 7.41%

o/w Arriving Passengers 3,484,257 3,762,009 7.97%

o/w Departing Travelers 3,527,734 3,770,094 6.87%

o/w Transit Travelers 4,228 3,853 -8.87%

Number of Flights 60,112 62,435 3.86%

For the Ten-Month Period Ending

Source: BIA, Credit Libanais Economic Research Unit

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

TotalPassengers

ArrivingPassengers

DepartingTravelers

TransitTravelers

7,535,956

3,762,009 3,770,094

3,853

BIA's Passengers by October 2018


-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

2009

2010

2011

2012

2013

2014

2015

2016

Oct-2

017

2017

Oct-2

018

4,985,499

5,552,746 5,653,969

5,960,414 6,264,368

6,569,469 7,240,388

7,519,377

7,016,219

8,235,8677,535,956

BIA Total Passengers


Weekly Market Watch


ABL AMENDS THE BRR ON LBP AND USD LENDING

According to the Association of Banks in Lebanon (ABL)’s circular number 388/2018 dated November 13, 2018, the ABL’s Board of Directors advocated Lebanese banks to lift the Beirut Reference Rate on lending in

Lebanese Pound (LBP/BRR) by 80 basis points to 11.50% effective as of the 1st of December 2018. This marks the first increase in the LBP/BRR since January 2018. Concurrently, the ABL’s Board of Directors recommended raising the Beirut Reference Rate on lending in U.S. Dollar (BRR/USD) by 30 basis points to 8.20%. It is worth highlighting that the aforementioned rates are not to be confused with the Beirut Prime Lending Rate (BPLR), yet constitute the basis for the calculation of the BPLR after factoring in liquidity cost, credit risk cost, and some profitability factor.

LEBANON NEWS

Rates as of

November 1, 2018

Rates as of

December 1, 2018Change (bps)

BRR on LBP Lending 10.70% 11.50% +80

BRR on USD Lending 7.90% 8.20% +30


6.54%6.54%6.59%6.67%6.65%6.72%6.66%

6.79%6.78%

6.74%6.82%6.83%

6.93%

7.03%

7.23%7.30%

7.30%

7.50%7.55%

7.90%

8.20%

8.71%

8.63%

8.65%8.67%8.65%

8.67%8.67%

8.66%

8.68%

8.61%

8.68%

10.65%10.70%

10.70%

10.70%

10.70%

10.70%

10.70%

10.70%10.70%

11.50%

7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

11.50%

12.00%

6.00%

6.50%

7.00%

7.50%

8.00%

8.50%

Dec-16

Jan-17

Feb-17

Mar-17

Apr-17

May-17

Jun-17

Jul-17

Aug-17

Sep-17

Oct-17

Dec-17

Jan-18

Feb-18

Mar-18

May-18

Jun-18

Jul-18

Aug-18

Nov-18

Dec-18

Evolution of Beirut Reference Rate on LBP & USD Lending

BRR/USD LBP/BRR


MONETARY AGGREGATES

All monetary aggregates ended the week of November 1, 2018 on a positive note. More specifically, the overall

money supply, “M4”, soared by LBP 459.61 billion on a weekly basis and by 1.07% on an annual basis to LBP 222,608 billion, noting that the non-banking sector’s Treasury bills portfolio rose by LBP 3 billion during the concerned week.

In parallel, Lebanese-Pound denominated deposits and currency in circulation, “M1”, widened by LBP 565.21 billion week-on-week to LBP 10,979 billion on the back of some LBP 297 billion hike in money in circulation, coupled with a LBP 268 billion expansion in demand deposits. On a yearly basis, “M1” rallied by 7.31%. Local currency term deposits, “M2”, also increased by LBP 347.27 billion on a weekly basis, yet plunged by 5.72% year-on-year to settle at LBP 78,001 billion.

Consequently, private sector term and saving deposits denominated in LBP (“M2-M1”) receded by LBP 217.94 billion (0.32%) to LBP 67,022 billion during the week of November 1, while deposits denominated in foreign currencies (“M3-M2”) rose by LBP 109.44 billion (0.08%) to reach LBP 133,397 billion.

MONEY MARKETS

The November 8 Treasury bill auction raised LBP 262.030 billion ($173.818 million), compared to LBP 136.081 billion ($90.269 million) in the auction of the previous week.

The majority of subscriptions was concentrated in the seven-year (53.47%) to maturity T-bonds, followed by the three-year (43.54%) and six-month (2.98%) tenure Treasury securities.

Consequently, the weighted average yield on Lebanese Pound Treasury bills stood at 6.77% in the auction of

November 8. The yields on the six-month, three-year, and seven-year to maturity Treasury securities remained flat at 4.99%, 6.50%, and 7.08% respectively.

Weekly Market Watch

SOURCE: BDL, REUTERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 11

CORPORATE NEWS

MONETARY PERFORMANCE

Lebanese Treasury Bills 3 Months 6 Months 12 Months 24 Months 36 Months 60 Months 84 Months 120 Months

Treasury Yield 4.44% 4.99% 5.35% 5.84% 6.50% 6.74% 7.08% 7.46%

3 Months

6 Months

12 Months

24 Months

36 Months

60 Months

84 Months

120 Months

3.00%

3.50%

4.00%

4.50%

5.00%

5.50%

6.00%

6.50%

7.00%

7.50%

8.00%

0 1 2 3 4 5 6 7 8 9

On the Run Yield Curve

Lebanese

Treasury

Bills

Yield (%)

Face Value

(in billions

of LBP)

% of Total

Face Value

6 Months 4.99% 7.817 2.98%

36 Months 6.50% 114.100 43.54%

84 Months 7.08% 140.113 53.47%

Total 262.030 100.00%

Source: Reuters, Credit Libanais Economic Research Unit

November 8, 2018

Mone y Supply

LBP Billion

M1 10,414 10,979 5.43%

M2 77,653 78,001 0.45%

M3 210,941 211,398 0.22%

M4 222,149 222,608 0.21%

M2 - M1 6 7 ,2 4 0 6 7 ,0 2 2 - 0 .3 2 %

M3 - M2 13 3 ,2 8 8 13 3 ,3 9 7 0 .0 8 %

Oc tobe r 2 5 , 2 0 18 Nove mbe r 1, 2 0 18 % Cha nge


150,000

200,000

250,000

October 25,

2018

November 1,

2018

222,149 222,608

210,941 211,398

Money Supply - LBP Billion -

M4 M3

Source: BDL, Credit Libanais Economic Research Unit

LEBANESE EQUITIES

Trading activity on the Beirut Stock Exchange loitered slothfully for the third consecutive week in

the absence of any particular block trades. In detail, the number of shares changing hands plunged to 367,028 shares, compared to 951,407 shares in the previous week, with traded value sinking to $1.93 million, from $11.53 million a week before. Trades were mainly concentrated in banking sector stocks,

which accounted for 62.95% of weekly traded volume.

The average daily trading volume dwindled to 73,406 shares this week, from 190,281 shares last week. Similarly, the average daily trading value

narrowed to just below $0.39 million, from nearly $2.31 million a week before.

Four losers and two gainers were spotted throughout the week, dragging the BSE’s market capitalization down by 0.99% week-on-week to about $9.64 billion and the Credit Libanais

Aggregate Stock Index (“CLASI”) lower by 1.17% to 926.60. In the real estate sector, trades solely consisted of Solidere “A” and “B” shares (37.05% of weekly traded volume), with the price of Solidere “A” dropping by 4.95% on a weekly basis to $6.33 and

that of Solidere “B” shedding 3.98% to $6.28. Consequently, the Credit Libanais Construction Sector Stock Index (“CLCI”) ended its week 3.47% lower at 397.54.

In the banking sector, Byblos Bank listed shares

amassed the highest concentration of trades (38.33% of total traded volume) on a thin turnover ratio of 0.02%. The Credit Libanais Financial Sector Stock Index (“CLFI”) ended Friday’s session 0.69% lower week-on-week at 1,264.21. This comes as a result of the 2.65% decrease in the price of Bank Audi listed shares to $4.77 and the 1.50% drop in

the price of BLOM Bank GDRs to $9.85, which together outweighed the 0.71% rise in the price of Byblos Bank listed shares to $1.41 and the 0.54% expansion in the price of BLOM Bank listed shares to $9.30.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 12

Credit Libanais Week of Week of Weekly YTD

Indices 9-Nov-18 16-Nov-18 % Change % Change

Credit Libanais Aggregate

Stock Index <.CLASI>937.61 926.60 -1.17% -14.86%

Credit Libanais Financial Sector

Stock Index <.CLFI>1,273.01 1,264.21 -0.69% -15.22%

Credit Libanais Construction

Sector Stock Index <.CLCI>411.83 397.54 -3.47% -13.46%

900

950

1,000

1,050

1,100

1,150

16-N

ov-1

7

07-J

an-1

8

28-F

eb-1

8

21-A

pr-

18

12-J

un-1

8

03-A

ug-1

8

24-S

ep-1

8

15-N

ov-1

8

Ind

ex V

alu

e

Credit Libanais Aggregate Stock IndexWeekly Performance

CLASI

CLASI 1.17%

.CLASI Credit Libanais Aggregate Stock Index

Value Daily % Chng Daily Net Chng

926.60 -0.591% -5.51

Yr.High Year Hi.Date Yr.Low Year.Lo.Date

1,133.98 4-Apr-18 907.48 26-Sep-18

Life High Life Hi.Date Life Low Life.Lo.Date

1,801.01 7-Jul-08 836.11 25-Mar-09

Friday, November 16, 2018

1,200

1,300

1,400

1,500

1,600

16-N

ov-1

7

07-J

an-1

8

28-F

eb-1

8

21-A

pr-

18

12-J

un-1

8

03-A

ug-1

8

24-S

ep-1

8

15-N

ov-1

8

Ind

ex V

alu

e

Credit Libanais Financial Sector Stock IndexWeekly Performance

CLFI

CLFI 0.69%

350

390

430

470

510

16-N

ov-1

7

07-J

an-1

8

28-F

eb-1

8

21-A

pr-

18

12-J

un-1

8

03-A

ug-1

8

24-S

ep-1

8

15-N

ov-1

8

Ind

ex V

alu

e

Credit Libanais Construction Sector Stock IndexWeekly Performance

CLCI

CLCI 3.47%

The market-cap weighted average price to book value (P/BV) multiple of listed stocks ended its week lower at 0.705x based on the closing prices of Friday’s session.

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 13

LEBANESE EQUITIES

Previous Last % Change

Value Traded ($) 11,534,623 1,930,322 -83.26%

Volume Traded 951,407 367,028 -61.42%

Average Daily Trading Value ($) 2,306,925 386,064 -83.26%

Average Daily Trading Volume 190,281 73,406 -61.42%

Market Cap - BSE ($) 9,739,336,544 9,642,789,897 -0.99%

Weighted Average P/BV 0.711 0.705 -0.78%

Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Activity Analysis

Source: BSE, Credit Libanais Economic Research Unit

0.702

0.704

0.706

0.708

0.710

0.712

November 9, 2018 November 16, 2018

0.711

0.705

Evolution of Beirut Bourse Comparable Benchmarks

P/BV

P/E P/BV

Solidere A $6.33 -4.95% 108,411 29.54% $693,364 35.92% 100,000,000 633,000 0.55 -20.97% - - -

Solidere B $6.28 -3.98% 27,566 7.51% $170,467 8.83% 65,000,000 408,200 0.55 -21.30% - - -

BLC Bank $0.93 0.00% - - - - 71,033,333 66,061 5.17 0.51 0.00% - - -

BLC Bank Preferred Class "C" $100.00 0.00% - - - - 350,000 35,000 n.a n.a 0.00% 6.75% 6.08% 6.08%

BLC Bank Preferred Class "D" $94.00 0.00% - - - - 750,000 70,500 n.a n.a -6.00% 7.18% 6.46% 0.46%

BLC Bank Preferred Class "E" $94.00 0.00% - - - - 263,510 24,770 n.a n.a -6.00% - - -

Bank Audi - Listed Shares $4.77 -2.65% 28,500 7.77% $136,920 7.09% 399,749,204 1,906,804 3.76 0.60 -17.04% 11.53% 10.38% -6.67%

Bank Audi GDR $5.25 0.00% - - - - 119,924,761 629,605 4.13 0.66 -10.10% 10.48% 9.43% -0.67%

Bank Audi Preferred "H" $87.00 0.00% - - - - 750,000 65,250 n.a n.a -13.52% 7.47% 6.72% -6.79%

Bank Audi Preferred "I" $89.90 0.00% - - - - 2,500,000 224,750 n.a n.a -10.06% 7.79% 7.01% -3.05%

Bank Audi Preferred "J" $90.00 0.00% - - - - 2,750,000 247,500 n.a n.a -9.95% 4.44% 4.00% -5.95%

Bank Of Beirut - Listed Shares $18.80 0.00% - - - - 20,796,417 390,973 8.83 1.06 0.00% 4.06% 3.65% 3.65%

Bank Of Beirut Priority Shares 2014 $21.00 0.00% - - - - 4,762,000 100,002 9.86 1.18 0.00% 7.63% 7.27% 7.27%

Bank Of Beirut Preferred "H" $25.00 0.00% 8,000 2.18% $200,000 10.36% 5,400,000 135,000 n.a n.a -3.47% 7.00% 6.30% 2.83%

Bank Of Beirut Preferred "I" $24.95 0.00% - - - - 5,000,000 124,750 n.a n.a -2.16% 6.76% 6.09% 3.93%

Bank Of Beirut Preferred "J" $25.00 0.00% - - - - 3,000,000 75,000 n.a n.a -2.53% 6.50% 5.85% 3.32%

Bank Of Beirut Preferred "K" $25.00 0.00% - - - - 4,000,000 100,000 n.a n.a -1.38% 6.50% 5.85% 4.47%

Byblos Bank - Listed Shares $1.41 0.71% 140,696 38.33% $198,284 10.27% 565,515,040 797,376 5.88 0.55 -11.88% 9.97% 8.98% -2.90%

Byblos Bank Preferred Class 2008 $71.00 0.00% - - - - 2,000,000 142,000 n.a n.a -30.12% 11.27% 10.14% -19.98%

Byblos Bank Preferred Class 2009 $72.00 0.00% 122 0.03% $8,784 0.46% 2,000,000 144,000 n.a n.a -28.71% 11.11% 10.00% -18.71%

Byblos Bank GDR $75.00 0.00% - - - - 1,309,078 98,181 6.25 0.58 -3.47% 9.38% 8.44% 4.96%

BEMO Bank - Listed Shares $1.56 0.00% - - - - 51,400,000 80,184 6.00 0.70 20.00% 4.25% 3.83% 23.83%

BEMO Bank Preferred Class 2013 $96.50 0.00% - - - - 350,000 33,775 n.a n.a -6.58% 7.25% 6.53% -0.05%

BLOM Bank GDR $9.85 -1.50% 40,508 11.04% $399,535 20.70% 73,896,010 727,876 4.52 0.72 -22.44% 11.45% 10.30% -12.14%

BLOM Bank Listed Shares $9.30 0.54% 13,225 3.60% $122,968 6.37% 215,000,000 1,999,500 4.27 0.68 -20.10% 12.13% 10.91% -9.19%

RYMCO Class "B" $3.28 0.00% - - - - 10,920,000 35,818 18.22 1.57 0.92% 1.68% 1.51% 2.43%

Holcim Liban $16.60 0.00% - - - - 19,516,040 323,966 7.48 1.84 14.80% 17.18% 15.46% 30.26%

Ciments Blancs Nominal $2.55 0.00% - - - - 9,000,000 22,950 5.20 1.21 13.33% 19.25% 17.33% 30.66%

Total Listed

Shares

YTD Total

Net Return

YTD

Price

Perf.

Market

Capitalisation

($000)

BEIRUT STOCK EXCHANGEWeekly

Value Traded

Lebanese Equities

Note: n.a stands for not applicable

Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Net

Dividend

Yield

ClosingWeekly

%Change

Weekly

Volume

Traded

% of Weekly

Volume Traded

% of

Weekly

Value

Traded

Gross

Dividend

Yield

Weekly Market Watch

SOURCE: CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 14

LEBANON’S MAIN INDICATORS

2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16 2 0 17 2 0 18

MACROECONOMIC INDICATORS

GDP (Current Prices) ($ Billion) 40.08 44.05 46.47 48.53 49.91 51.48 54.18* 56.71*

Real GDP Growth Rate 0.92% 2.80% 2.65% 1.97% 0.24% 1.74% 1.50%* 1.00%*

GDP per Capita (Current Prices) ($) 9,144 9,954 10,502* 10,966* 11,279* 11,524* 12,013* 12,454*

Foreign Direct Investment Inflows ($ Billion) 3.14 3.11 2.66 2.91 2.35 2.61 2.63

FDI/GDP Ratio 7.84% 7.06% 5.72% 6.08% 4.75% 5.26% 5.11%

INDUSTRY

Industrial Exports ($ Million) 3,530 3,567 3,384 3,150 2,956 2,527 2,474 1,464 (3)

Import of Industrial Machinery ($ Million) 239 288 300 269 234 236 257 169 (3)

TOURISM

Total Number of Tourists 1,655,051 1,365,845 1,274,362 1,354,647 1,517,927 1,688,357 1,856,795 1,505,745 (5)

Growth in Tax- Free Spending 10% - 6% 4% 8% 2% - 9% 5% 5% (5)

REAL ESTATE

Value of Real Estate Transactions ($ Million) 8,841 9,175 8,708 8,952 8,006 8,482 9,954 6,609 (6)

Number of Real Estate Sales Transactions 82,984 74,569 69,198 70,721 63,386 64,248 73,541 49,652 (6)

Construction Permits (000 sqm) 13,890 12,362 10,527 11,159 10,294 9,935 9,271 5,587 (5)

Cement Delivery (000 Tons) 5,550 5,309 5,831 5,517 5,043 5,265 5,149 3,197 (4)

TRANSPORTATION

Beirut Port: Freight Activity (000 Tons) 6,677 7,225 8,268 8,281 7,240 8,737 8,629 5,945 (5)

Beirut Airport: Number of Passengers (Million) 5.65 5.96 6.26 6.57 8.22 7.61 8.24 7.54 (6)

FOREIGN TRADE

Imports ($ Million) 20,158 21,280 21,228 20,494 18,069 18,705 23,130 13,718 (4)

Exports ($ Million) 4,265 4,483 3,936 3,313 2,952 2,977 2,844 1,985 (4)

Trade Balance ($ Million) (15,893) (16,797) (17,292) (17,181) (15,117) (15,729) (20,287) (11,733) (4)

BALANCE OF PAYMENTS

Net Foreign Assets at the Financial Sector ($ Million) (1,996) (1,537) (1,127) (1,407) (3,354) 1,238 (157) (1,311) (5)

Foreign Assets at BDL ($ Billion) 32.24 35.74 35.29 37.86 37.09 40.71 41.99 41.48 (8)

Gold Reserves at BDL ($ Billion) 14.40 15.31 11.10 10.95 9.85 10.71 11.96 11.16 (8)

PUBLIC FINANCE

Government Expenditures ($ Million) 11,675 13,321 13,640 13,952 13,528 14,867 15,381 8,977 (2)

Government Revenues ($ Million) 9,333 9,396 9,420 10,879 9,576 9,923 11,625 5,941 (2)

Budget Primary Defic it / Surplus ($ Million) 1,662 (110) (240) 1,307 724 21 1,428 (155) (2)

Total Defic it ($ Million) (2,342) (3,925) (4,220) (3,073) (3,952) (4,944) (3,756) (3,036) (2)

Defic it / GDP Ratio 5.84% 8.91% 9.08% 6.33% 7.92% 9.60% 6.93%

Debt Service / GDP Ratio 9.99% 8.22% 8.16% 9.03% 9.38% 9.64% 9.57%

Net Public Debt ($ Billion) 46.35 49.12 53.18 57.30 61.54 65.42 69.32 73.63 (5)

Gross Public Debt/GDP Ratio 133.89% 131.49% 137.95% 139.16% 142.18% 150.95%* 152.85%* 157.26%*

MONETARY AGGREGATES & INFLATION

M4 ($ Billion) 103.50 110.00 117.41 124.53 131.17 139.20 145.16 147.67 (7)

(M2- M1) ($ Billion) 35.82 39.32 40.56 43.27 46.25 47.95 45.45 44.46 (7)

Monetization Level (M2/GDP Ratio) 99.32% 99.56% 98.00% 100.18% 104.31% 105.75% 96.63%

Change in CPI (%) 4.27% 4.68% 2.05% - 1.66% - 3.40% 3.14% 5.01% 6.53% (5)

BANKING SYSTEM

Number of Commercial Banks 54 54 56 55 53 50 49 65 (1)

Number of Branches 948 962 985 1,020 1,039 1,056 1,065 1,068 (1)

Total Assets ($ Million) 140,576 151,883 164,821 175,697 185,989 204,311 219,856 241,117 (5)

Total Deposits ($ Million) 117,703 127,657 139,166 147,637 154,951 166,446 172,965 178,200 (5)

Loans to the Private Sector ($ Million) 39,375 43,452 47,381 50,899 54,224 57,180 60,318 59,422 (5)**

Customer Loans/ Deposits 33.45% 34.04% 34.05% 34.48% 34.99% 34.35% 34.87% 33.35% (5)**

Dollarization Rate 65.92% 64.82% 66.14% 65.71% 64.88% 65.82% 68.72% 69.14% (5)

Exchange Rate (LBP to USD) 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50

(1) As at End of M arch, 2018, (2) As at End of June, 2018, (3) As at End of July, 2018, (4) As at End of August, 2018, (5) As at End of September, 2018, (6) As at End of October, 2018, (7) As at November 1,

2018, (8) As at M id-November, 2018

Recap of Lebanon's Major Indicators

* Figures Reflect IM F Estimates

** Year 2018 loan figures reflect BDL's reclassification of some balance sheet items to meet IFRS9 requirements.

LEBANON’S RATINGS

Weekly Market Watch

SOURCE: S&P GLOBAL RATINGS, MOODY’S, FITCH RATINGS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 15

Rating Agency Tenor Rating

Long- Term B-

Short- Te rm B

Moody's Investors Service Long- Term B3

Long- Term B-

Short- Te rm B

Source: S&P Global Ratings, M oody's Investors Service, Fitch Ratings, Credit Libanais Economic Research Unit

Stable

Stable

Stable

Republic Of Lebanon Sovereign Ratings

Outlook

Standard & Poor's Globa l

Ra tings

Fitch Ra tings

Rated Banks

Long Term

Foreign

Currency

Outlook Long

Term

IDR

Outlook Long-Term

Counterparty

Credit Rating

Short-Term

Counterparty

Credit Rating

Outlook

Bank Audi B3 Stable B- Stable B- C Stable

BLOM Bank B3 Stable - - B- - Stable

Byblos Bank B3 Stable B- Stable - - -

BankMed - - - - B- C Stable

Moody's Investors Service Fitch Ratings

Source: M oody's Investors Service, Fitch Ratings, S&P Global Ratings, Credit Libanais Economic Research Unit

S&P Global Ratings

Lebanese Banks' Latest Ratings

CONTACTS

RESEARCH

Fadlo I. Choueiri, CFA

[email protected]

961-1-608 000 EXT: 1280

Jad Abi Haidar, CFA [email protected] 961-1-608 000 EXT. 1283

Joelle Samaha [email protected] 961-1-608 000 EXT. 1281

Mayda Zaarour [email protected] 961-1-608 000 EXT. 1282

Nagham Abdel Ahad [email protected] 961-1-608 000 EXT. 1284

Marc Moukarzel [email protected] 961-1-608 000 EXT. 1286

MONEY MARKETS DESK

Robert Araman

[email protected]

961-1-608 000 EXT. 0760

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any contract or commitment whatsoever. Reasonable care has been taken to ensure that the facts stated herein are accurate and the estimates, opinions and expectations contained herein are fair and reliable.

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231 16

mailto:[email protected]

mailto:[email protected]

Documents

Issue No. 621 - Credit Libanais · result of the sharp increase in short-term net debt inflows from a negative $14.3 billion in 2016 to a positive $297.2 billion in 2017, coupled