In Lebanon and Jordan, which have absorbed thousands of Syrian refugees and where the extent of the spillover from the crisis remains unclear, uneasiness about the future has taken a heavy toll on business confidence. “If you want to put together the economic and political, definitely Lebanon is the country most affected,” said Nassib Ghobril, head of economic research and analysis at the Lebanon-based Byblos Bank. “Definitely there is an impact on investor sentiment. We are not seeing new big projects being announced in Lebanon.”
There are also fears that the crisis next door could reignite armed conflict in Lebanon, where ties to Syria run deep. Despite calls for restraint by many politicians, there are regular demonstrations for and against the Syrian president, Bashar al-Assad. These fears, with the compounded effect of the collapse of the Lebanese government in January 2011, a subsequent five-month government vacuum and continuing internal instability and tension, have contributed to a deterioration of the economy over the past year.
After an average gross domestic product growth rate of about 8 percent from 2007 to 2010, last year the figure plunged to 1.5 percent. The outlook for this year does not look any better. In Lebanon, the most visible economic impact of the crisis in Syria has been the lack of tourists. In 2009, Beirut was named the top destination in the world to visit by The New York Times and tourist arrivals hit an all-time high, only to be surpassed in 2010. But in 2011, tourist arrivals dropped by more than 24 percent, according to preliminary numbers from the United Nations World Tourism Organization.
Such a drop represents a significant loss for an industry that, according to the country’s tourism minister and analysts, indirectly accounted for more than 20 percent of the country’s gross domestic product. Jordan, already struggling with rising unemployment rates and a large national deficit, is also wrestling with a decline in tourist numbers since unrest began in the Arab world last year. The country has also witnessed its own protests, primarily demanding political and economic changes. Other nations are feeling the effects of the Syrian conflict, all the more that Syria occupies a strategic trade location in the region.