World Bank expert discusses the effects of the financial crisis on Arab markets
From left: Auguste Tano Kouame, World Bank's acting MENA chief economist; Dr. Salaheddin Abosedra, chair of LAU's Department of Economics and Finance; and Jad Chaaban, Lebanese Economic Association's acting president.
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January 13, 2009—
As the global economic crisis deepens, the financial market in Lebanon has resources to face the challenges, but it cannot avoid the repercussions forever. The point was made by Auguste Tano Kouame, World Bank’s acting MENA chief economist, who lectured on “The Impact of the Financial Crisis on Arab Capital Markets” at LAU’s Business School on December 4.
“Banks in Lebanon are very well supplied in terms of deposits coming from the Lebanese diaspora,” Kouame said. The deposits supply will suffice even if the crisis lasts for two to three years, he added.
But at the same time Kouame believes that Lebanon’s real economy may decline, and that may affect the banking sector, “unlike what happened in the United States, Europe and the Gulf region, where the stock market was first hit.” He explained that the reason is the dependency of Lebanon’s economy on tourism receipts, remittances and exports.
Kouame also thinks that Lebanon may not be influenced gravely by the crisis in the Gulf states, even if some expats come back. “The impact has not been assessed yet and it is not necessarily negative,” he said. According to Kouame, “it is not clear if all 400,000 of the Lebanese workers will return.” “At the same time, many of them have savings that they might invest in the internal market and create jobs for others,” he added.
According to the expert, the World Bank can use its capital to help developing countries that are facing the impact of the crisis. “We are in partnership with the International Monetary Fund in order to implement the so-called financial assistance programs for the small-medium enterprises in developing countries,” Kouame said.
The seminar was organized by LAU’s Department of Economics and Finance and the Lebanese Economic Association as part of World Bank Lebanon Office’s development seminar series.
According to Dr. Salaheddin Abosedra, Economics and Finance chairman, the event offered insight into a “timely subject” since “everyone is affected or will be affected in one form or another [by the situation].”
Being able to listen to such a lecture “is a great opportunity as many of us are trying to figure out what’s going on in the world right now,” said Dr. Mary Habib-Tofailli, LAU assistant professor of economics.
Abosedra believes that such activities add “substantial value to what students get in the classroom.” “We like to expose them to what is happening in the real world,” he said.
According to Abosedra, such exposure might help students better plan their future in the business world. “By informing students about the situation, we’ll be helping them anticipate possible changes in the labor market,” he said. “It also helps make their parents aware of the situation, which concerns them because they often finance their children’s education and might also be impacted,” he added.