Lessons from Lebanon for the UAE?
Posted on 10 February 2009 with no comments from readers
Just back from a long weekend skiing in the Lebanon, and perhaps I have ‘discovered’ one country that has not been affected much by the global economic crisis. I talked to quite a few local people and it seems the crisis has so far not impacted on Lebanon.
Apparently the Central Bank of Lebanon stopped local banks lending internationally three years ago, so they do not have the sub-prime exposure that has dragged down many global banks. Local lending policies have also been very conservative, plus there has been a flow of money into Lebanon from the diaspora repatriating money as the crisis hit banks overseas.
Reconstruction
There is also clearly a lot of rebuilding work in progress to repair the devastation of the summer 2006 war, and while that is not a source of economic growth any country would wish for, it has a considerable effect nonetheless.
In addition, I was impressed by local prices as a tourist. The UAE has become very expensive for dining out in hotels, while at the Inter-Con in the major ski resort above Beirut price levels were similar to the Dubai of former times.
Perhaps the UAE ought to be considering revisiting its roots as a lower cost tourist destination, otherwise it risks missing out to the Lebanon. And actually it was pretty apparent where the Gulf visitors who used to come to Dubai have gone these days.
Central banking
Has the Lebanon Central Bank been better at running its banking sector than the UAE? I think we will have to wait and see more UAE banks report their delayed full year figures to assess that, but I did interview the Lebanese Central Bank Governor 15 years ago when he and I were much younger, and thought him extremely able.
However, Lebanon is still running its economy from a far weaker base than the oil-rich UAE and I suppose the global financial crisis could yet reach its shores. The UAE benefits and now suffers from being far more a part of the global economy than Lebanon, and that surely has to be a strength and not a weakness in the longer term.
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