BEIRUT: Bank Audi said that despite the economic slowdown in Lebanon this year the country was still able to avoid a recessionary trap thanks to positive monetary and financial indicators.

“Most real sector indicators show the economy has slowed down but still managed to avoid a recessionary trap or negative real GDP growth rates while sustaining monetary and financial stability indicators,” Audi said in its half year report on the performance of the Lebanese economy.

A moderate expansion in money supply, net currency conversions in favor of the Lebanese pound and a new record high level of the Central Bank’s foreign assets marked the first half of 2012, the report said.

Inflation remained contained at an annual average of 5.1 percent over the first half. “ Driven by [USD to LL] conversions and a $2 billion swap operation, the Central Bank’s foreign assets reached a new record high of $35.2 billion at end-June 2012, thus covering 85.5 percent of Lebanese pound money supply and 19.3 months of imports at end-June 2012,” Audi said.

Audi added that the overall performance of the Lebanese banking sector was relatively acceptable despite the economic conditions in the country.

“Banking indicators saw a relatively moderate growth year-to-date,” the report said. Total assets grew by $5.3 billion in the first half of this year, which was still 18.2 percent lower than the increase witnessed in the same period last year; and growth is 15.1 percent below the average growth registered over the last five years.

“Still, operating conditions continue to be tough amid pressures on spreads and fee income, with domestic net profits reporting a net contraction of 3.9 percent over the first five months of 2012, the second consecutive earnings contraction for Lebanon’s banking sector at large,” the report said.

Audi also commented on the 2012 budget. “The government ratification of Lebanon’s 2012 budget proposal comes within a current global atypical environment where public debt and deficit woes rise on the top of the radar screens of investors around the world,” the bank said.

“Which makes the issue of avoiding public finance drifts among top domestic priorities, despite some atypical economic and market conditions related to the Lebanese context per se,” Audi said.

Though Lebanon’s public finance deficit must be curbed, global comparisons should be considered when addressing Lebanon’s public finances and its fiscal drifts.

Lebanon’s “debt-to-GDP ratio, which was as high as 180 percent in 2006, stands now at around 135 percent. This improvement in Lebanon’s debt ratios compares with a net deterioration worldwide in debt ratios, as the average advanced countries debt-to-GDP ratio rose by more than 30 percent over the same period,” according to the report.