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Oct 2020

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Lebanon: Beirut explosion caused up to $4.6bn in damages to infrastructure and physical assets - World Bank

Source: Middle East Insurance Review | Oct 2020

The 4 August Beirut port explosion caused between $3.8bn and $4.6bn in damage to physical stock, while losses including changes in economic flows as a result of the decline in the output of the economic sectors are estimated to be in the range of $2.9bn and $3.5bn, according to preliminary estimates arising from a Rapid Damage and Needs Assessment (RDNA).
 
The assessment was conducted by the World Bank Group (WBG), in cooperation with the UN and the EU in close partnership with Lebanese ministries, civil society organisations and other key stakeholders, the World Bank said in a statement.
 
The sectors most severely affected by the explosion are housing, transport, and tangible and intangible cultural assets (including religious and archaeological sites, national monuments, theatres, archives, libraries and monuments), according to the RDNA.
 
Public sector reconstruction and recovery needs for this year and the next are estimated in the range of $1.8bn and $2.2bn, with between $605m and $760m needed in the immediate term until December 2020, and between $1.18bn and $1.46bn in the short term for the year 2021. The transport sector’s needs are the highest, followed by culture and housing.
 
The three main economic effects of the explosion are: losses in economic activity caused by the destruction of physical capital; trade disruptions; and losses in fiscal revenues for the government.
 
Even prior to the explosion, Lebanon was facing compounded crises with pre-explosion projections of 2020 real GDP growth well into the negative double digits, driven by the spillovers from the Syria conflict, whereby Lebanon continues to host the largest refugee per capita population in the world; a financial and economic crisis that includes an impaired financial sector, a currency crisis, very high inflation rates, a defaulting public sector; and the effects of the COVID-19 pandemic. The disaster will not only exacerbate the contraction in economic activity, but also worsen poverty rates, which were already at 45% of the population just prior to the explosion. M 
 
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