The negative impact of Syria’s war on its neighbours has been discussed at length. Governments in Jordan and Lebanon are constantly appealing for more support. But what is less spoken about is the economic boon of having one of the world’s largest aid operations move into town.
A new UN study suggests there may be far more positive implications from hosting refugees than previously estimated.
The study, conducted jointly by the United Nations Development Programme (UNDP) and the UN’s refugee agency, UNHCR, looks at the impact of humanitarian aid on the Lebanese economy since Syrian refugees first began fleeing the war in 2011.
It argues that for every dollar spent on the humanitarian response roughly another $0.50 is added to the economy through multiplier effects.
As such, the roughly $800 million annual spending on refugees is leading to a total positive impact of $1.2 billion.
In total, it said, humanitarian aid was adding 1.3 percent to Lebanese GDP annually.
Aid agencies that before the 2011 civil war had only a few staff have now ballooned into the hundreds, providing plenty of new jobs for the Lebanese, while hundreds of millions of dollars have also been pumped into the economy in food and other forms of aid – creating trade for local businesses.
Lebanon, a country of only around four million citizens, is hosting nearly 1.2 million registered Syrian refugees, but has been cracking down on their presence.
The Lebanese government has argued that the country cannot cope with the scale of the influx, introducing tough new regulations for those seeking to renew their status and even recently banning UNHCR from registering newly arrived Syrians as refugees.
The report does conclude that the net impact of the Syrian crisis – including a 23 percent decline in tourism and 7.5 percent loss in exports – is negative.
But most of the total 1.6 percent of GDP in estimated losses are offset by the economic benefits of humanitarian aid, leaving the overall negative impact at only 0.3 percent of GDP annually.
This figure is far lower than previous estimates. In 2013, the World Bank put the annual impact at minus 2.9 percent of GDP and said it was driving up to 170,000 Lebanese into poverty.
Jad Chaaban, associate professor of economics at the American University of Beirut, argued that the World Bank report was based on flawed methodology.
He reckoned the effect of the influx of aid workers has been even more positive than the new UNHCR/UNDP study estimates as the refugees are clustered in northern Lebanon and the eastern Bekaa Valley – two of the country’s poorest areas.
“This is an aggregate figure, not a regional analysis. In a way it underestimates the true value to the regions,” he said. “The local impacts in these regions are probably even more positive.”
Chaaban pointed out that the Lebanese economy actually grew faster than expected in 2014 – at about 2 percent, compared with 0.9 percent in 2013.
“With the war next door and a large refugee population you would expect negative growth, perhaps 1 or 2 percent,” he said. “So it shows that Lebanon is definitely benefitting from some parts of the crisis.”
Yet Nassib Ghobril, head of economic research at the country’s Byblos Bank, said the UN was seeking to put a “positive spin” on the refugee situation.
“They are looking at the impact of this specific 800 million dollars and then taking certain indicators, not all indicators, into account,” he said. “You cannot separate the impact of humanitarian aid from other effects.”
While the UN report included some negative impacts of the Syrian crisis, it ignored others, including “consumer confidence and investor sentiment,” Ghobril said.
Regional trade routes have been hit hard by the conflict and the uncertainty has undermined private sector confidence, he added.