Throughout the 2020s the world economies have slid in and out of recession in rich and poor nations. People in rich economies like the US and Austria have been able to manage by cutting back on essentials and citizens of poorer nations like Cameroon and Guatemala have been less affected due to their lower-than-average connectivity to the global economy. But middle-income nations like Lebanon and Pakistan have felt the full brunt of economic troubles in the young decade.
According to the World Bank, the world’s Middle-Income Countries (MICs) are a diverse group by size, population, and income level. They are lower-middle-income economies – with a GNI per capita between $1,036 and $4,045; and upper-middle-income economies – with a GNI per capita between $4,046 and $12,535 (2021). In the previous twenty years, Lebanon rose from a brutal civil war between religious factions to become one of the richest per capita countries in the Middle East. Yet years of mismanagement caused a rapid decline in the “Switzerland of the Arab World. ”
Lebanon Economic Production
According to the World Bank, Lebanon’s Gross Domestic Product (GDP) in 2021 was 23.13 billion US dollars, a significant decline from close to US$52 billion in 2019. This decline is due to the severe economic crisis that Lebanon has been facing since 2019, exacerbated by the COVID-19 pandemic, political instability, and the Beirut explosion in August 2020. The World Bank projects that Lebanon’s real GDP will contract by a further 6.5% in 2022.
Lebanon’s GDP per capita was approximately $3,042 in 2021, down from $6,406 in 2019. The country has experienced hyperinflation, with the currency losing over half its value in the parallel market in 2022 alone. It has been over a century since the world has seen such an economic decline. Looking at the story of Lebanon can help us determine if this is just the beginning of a massive economic decline for many middle-income nations.
Lebanon Crisis
Lebanon’s economy has been in crisis since 2019, with a severe economic contraction and a marked decline in disposable income. The country has experienced hyperinflation, with the currency losing over half its value in the parallel market in 2022 alone.
The World Bank projects that real GDP will contract by 6.5% in 2022, subject to high uncertainty and inadequate macro policy responses. The crisis has led to a decline in the middle class, with many Lebanese citizens emigrating for better prospects. The crisis has also led to a shutdown of the