In Lebanon, international worker remittance has been playing an increasingly important role in the economy since the 2019 financial crisis. The International Monetary Fund (IMF) defines remittance as household income from foreign economies arising mainly from migration to those economies. In 2022, international remittances from migrants made up 37.8% of Lebanon’s GDP, surpassing the share of exports in the country’s GDP. In addition, the figure represents the highest remittance to GDP ratio in the Middle East and North Africa region. 

Remittance in Lebanon

The high volume of emigration in Lebanon plays a central role in the size of remittances the country’s citizens receive. While the country has a population of 5.49 million population as of 2022, an estimated 880,000 Lebanon migrants or more than 16% of the population, resided outside the country. Other Arabian countries, North America and Europe are the top destinations for migrants. Before and during the 2008 global recession, remittance composed more than 25% of the country’s GDP, but its share decreased steadily in the decade between 2008 to 2018 until the 2019 financial crisis emerged in Lebanon.  

Since the year 2019, Lebanon’s economy has been grappling with a deep financial crisis that was exacerbated by the COVID-19 pandemic and the Port of Beirut explosion in 2020. The country’s GDP plummeted from around $52 billion in 2019 to an estimated $23.1 billion in 2021, leading to a rapid decline in income and basic services in the country. According to the World Bank estimates, the poverty rate of the country more than tripled since 2012, with 44% of the country’s population living below the poverty line as of 2022. 

A Buffer During Crisis

Against the backdrop of the enduring economic crisis, international remittance acts as a crucial buffer against poverty for families in Lebanon and a hedge against the complete collapse of the economy and social order. In 2022, an estimated 15% of households rely on remittance for income, up from the pre-crisis 10%. A survey by the UNDP also revealed that 29% of households started receiving remittances from their family members abroad as a response to the impacts of the financial crisis. The majority of the remittances were used to pay for food, electricity and medical expenditures, highlighting the importance of the remittance for Lebanese households to maintain their living standards.   

Remittances have become more important in alleviating poverty in the country after the financial crisis. In 2022, receiving remittances reduced a household’s possibility of being poor by five percentage points and the results were significantly robust. In comparison, in the year 2012, the percentage was four points and the statistical correlation was weak. 

Development Aid

From a long-run perspective, before the financial crisis in Lebanon, remittance played an important role in facilitating poverty reduction and economic development. The research found that remittance correlates positively with schooling attendance in Lebanon, indirectly contributing to the development of human capital and the long-run development of the economy. In addition, there is also evidence that the inflow of remittance contributes to the development of the financial market and long-run economic growth. A 2019 study further estimated that every 1% increase in remittance increases economic growth by 2%.

Looking Ahead

International remittances have become a vital lifeline for Lebanon, significantly contributing to the economy and providing essential support for families amid ongoing economic challenges. With remittances comprising a substantial portion of Lebanon’s GDP, their role in alleviating poverty and sustaining living standards remains critical. As Lebanon continues to recover from its financial crisis, the ongoing flow of remittances could be essential for economic stability and future development.

– Wangruoxi Liang

Wangruoxi is based in Ann Arbor, MI, USA and focuses on Business and New Markets for The Borgen Project.

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