BEIRUT: Standard Chartered Bank revised Lebanon’s projected growth rate for 2011, downgrading it to around 1.5 percent, reported Lebanon This Week, the economic publication of the Byblos Bank Group.

The figures means Lebanon has one of the slowest growing economy’s in the Middle East and North Afirca region. Lebanon is now ranked as the third slowest growing economy in the MENA region, according to the report.

While Standard Chartered Bank revised its growth projection for Lebanon this year to 1.5 percent, it maintained its 5 percent growth rate figure for 2012.

The report also estimated the country’s inflation rate at 6 percent for 2011, compared to 5 percent in 2010, while it expected the inflation rate to slightly fall to 5.4 percent in 2012.

It sees Lebanon’s current account deficit as widening in 2011 to reach 29 percent of Gross Domestic Product (GDP) and 23 percent in 2012, compared to a 22 percent deficit in 2010.

The report attributed the economic slowdown to domestic and regional instability, coupled with a general slowdown in the first half of the year during which Prime Minister Najib Mikati was struggling to form a new Cabinet.

In mid-January, March 8 alliance lawmakers withdrew from then Prime Minister Saad Hariri’s Cabinet, forcing its collapse. Although nominated on Jan. 25 to lead the next government, Prime Minister Najib Mikati was only able to form his government until late June.

During that period, the country went through months of political paralysis and deteriorating economic conditions with high rates of inflation and commodity prices.

The paralysis, according to the report, translated into real GDP growth of less than 1 percent.

Despite the formation of the new government, the country’s economy still faces major risks. The unrest in Syria plays a particularly destabilizing effect on its younger neighbor as does the possible deterioration of ties between Lebanon and the Western community over the Special Tribunal for Lebanon, the report added.

There is an ongoing dispute in the government over whether Lebanon should pay its share of the STL financing.

Some lawmakers, including Mikati, have warned that halting the financing of the tribunal, which indicted four Hezbollah members of involvement in the assassination of Hariri’s father, former Prime Minister Rafik Hariri, might place Lebanon in confrontation with the international community –something which they argue the country cannot afford.