BEIRUT: Month after month, Lebanon’s 2011 economic growth forecasts were revised downward, most recently landing in the upper range of 1-2 percent. Despite the obvious melancholy, the country’s slower pace of growth is more inevitable than self-inflicted, and in a sign of the times, is ahead of many of the country’s traditional peers.

Although the Lebanese economy was hit by the collapse of the national unity government in January, an uncommon consensus among economists attributes weak growth rates to regional turmoil, especially in Syria, placing little blame on domestic political disputes.

“Internal politics have always been there, so I am not sure they affected us this time, but the situation in neighboring countries negatively affected tourism and reduced investor appetite,” said Dr. Salim Chahine, professor of finance at the American University of Beirut told The Daily Star in an interview.

Simon Neaime, chair of the economics department at AUB also pointed to the impact on tourism from regional unrest. He said that “Ramadan was in the middle of the summer this year so the country lost some tourism, which contributed to lower growth rates,” ruling out an effect from European debt concerns “because not many entities in Lebanon have ties to Europe.”

“Domestic politics and regional events both played a role in lower economic growth in Lebanon, but by the beginning of the summer tourist season, the government was formed and the country had a successful season,” said Dr. Georges Nehme, economist and Antonine University professor who believes the negative impact of politics on the economy in 2011 is exaggerated.

Indeed, downgrades continued to hit Lebanon even after relative political stability returned with the formation of the new government, pointing fingers to Syrian unrest. Earlier in October, HSBC revised the country’s economic growth rate down to a meager 1.7 percent, but said the country remains a safe haven for the region, shortly after Standard Chartered said the Lebanese economy is expected to grow at 1.5 percent.

But even low single digit growth rates place the country in the ballpark, and often ahead, of many Middle East economies as well as the European Union and the United States. According to BofA Merrill Lynch, a U.S.-based investment bank, real GDP growth in the U.S. and EU will slow down to 1.6 percent and 0.8 percent respectively in 2011 while Bahrain’s economy will shrink by 2.2 percent, all lagging behind Lebanon.

Even the United Arab Emirates, which escaped the political domino of Arab uprisings, is seen growing by 2.8 percent, only a click ahead of Lebanon’s growth despite increased revenues from higher oil prices. Growth in Switzerland of the east is also not too far from that at Switzerland of the west, projected at 1.9 percent in 2011.

Other key indicators also corroborate Lebanon’s resiliencein the face of stormy regional and international weather. Private sector deposits, although weaker than previous years, maintained a steady increase in 2011, rising 5.4 percent by the end of July compared to UAE’s 6.7 percent in the first six months and the gap has been steadily narrowing.

Lebanon’s credit fundamentals have also remained exceptionally strong amid a wave of credit downgrades in the region. The country, along with Saudi Arabia and Qatar, are the only economies in the Middle East with stable sovereign and corporate debt outlooks from Standard & Poor’s, a global credit rating agency.

According to Nehme, “the central bank’s policies have protected Lebanon from excessive risk-taking. Also, given that public lending is around 50 percent of total bank lending, banks had no incentive to increase risk-taking which is usually a negative but now a positive factor.”

And to European countries forced to cut social spending and trim wages and the public workforce, Lebanon is arguably in an enviable position. Debt levels have remained stable, rising 0.4 percent by the end of July compared to soaring public debt in the eurozone. The government is even planning to raise the minimum wage, expand the public workforce, and make cash payments aimed at alleviating poverty.

Although Neaime sees ulterior motives to the sudden focus on social spending, he still sees them as a belated positive. He said that “politicians are trying to prevent social unrest similar to neighboring countries by increasing social spending which has been low in Lebanon, so we can afford to pay.”

Chahine struck a similarly cautious note explaining that “Lebanon is really far below what’s given in developed countries, so what the government is offering to give is very little in comparison and is in fact a preparation for high taxation,” in reference to the draft 2012 budget which proposes an increase in the Value Added Tax to 12 percent.

Based on regional events, 2012 is not expected to bring news to the Lebanese economy as the growth ball is almost fully outside Lebanon’s court and mostly in its backyard. “We can’t paint a rosy outlook for 2012 because we have to see how things unfold in Syria and other Arab countries and what happens with oil prices because they affect remittances from the Gulf region,” said Neaime.

Similarly, Nehme warned that an import ban by Syria would take a heavy toll on Lebanon’s industrial sector and consequently economic growth. In a desperate move to protect its dwindling foreign exchange, Syria had banned imports in late September but reversed the decision two weeks later.

“In my view, this would have an extremely dangerous and much bigger impact on the economy than the blockage of transit because a lot of Lebanon’s industrial goods are sold in Syria,” said Nehme. At the same time, he expressed confidence in stronger economic growth in 2012 based on increased government spending and given the country is entering a new elections cycle.

Lebanon’s handful of cautious stability appears to have staved off the contagious economic downturns floating around and deliver enough growth for the country to limp into 2012 with some rays of hope for a rebound.