BEIRUT, Aug. 16 (Xinhua) — The short-term positive impact of the drop in the Turkish lira on Lebanon is the decline in the price of products imported from Turkey, local analysts said.
“Turkey is one of the main sources of imports for Lebanon so the drop in the Turkish lira will be to our advantage since Turkish imports will become cheaper,” Nassib Ghobril, chief economist and head of the Economic Research and Analysis Department at Byblos Bank, told Xinhua.
According to a report by local channel LBCI, Lebanon’s imports from Turkey reached 777 million U.S. dollars in 2017.
Imports from Turkey include iron products, aluminum, food and beverages in addition to clothes.
Exports reached 120 million dollars in 2017 and 72 million dollars in the first six months of 2018.
The drop in the Turkish lira will also have negative repercussions in the short run when it comes to Lebanon’s exports to Turkey.
“Exports from Lebanon to Turkey will drop because they will become more expensive,” said Ghobril.
Jassem Ajaka, an independent economist, said that Lebanese merchants will buy products from Turkey at lower prices and they will be able to make more profits unless they drop their prices which will benefit consumers.
LBCI’s report says that Lebanese will be encouraged to invest in Turkey following the drop in the Turkish lira.
“The Turkish will offer more incentives in a bid to attract foreign investments,” it said. “But Lebanon will unfortunately lose these investments,” it added.
On the banking front, Ghobril says that the drop in the lira may affect Lebanese banks operating in Turkey in the long run.
Ghobril explained that companies that have borrowed dollars from banks operating in Turkey will find difficulties in returning this sum because it is more expensive to do so now.
He added that there may be a deterioration in the banks assets’ quality in terms of non-performing loans or doubtful loans.
“There will also be a reluctance on the demand side of loans since the economy has entered a period of uncertainty,” said Ghobril while adding that profits will be impacted.