BEIRUT: Net capital inflows into Lebanon amounted to $2.036.4 billion in the first two months of 2009, up by 0.3 percent when compared to the same period of 2008. When compared to the same period of 2007, however, the rise was at a much sharper 77.5 percent. "The influx of capital into the country in the first two months of the year is deemed significant, even though the yearly increase was mild," Bank Audi's Weekly Monitor said.

It added that amount of capital inflow into Lebanon in the first two months of 2008 was a record high when compared to the same months of previous years back then, and now, in the first two months of 2009, capital inflows have maintained their record high level, rising slightly above their value in the same period of 2008.

Although the trade deficit contracted in the first two months of 2009, as compared to the same period of 2008, it remained relatively large. Capital inflows of the first two months of 2009 not only managed to fully cover the trade deficit, rather it resulted in the momentous cumulative balance of payments in the first two months of the year, which also hit peak levels when compared to the same months of previous years.

The high amount of capital inflows during this year's first two months is largely due a rise in spending of tourists in Lebanon, as tourism activity soared upwards during this period. It is also the result of increased inflow of non-residents' deposits into Lebanese commercial banks. Indeed, those two items have mitigated any negative repercussions in capital inflows into Lebanon associated with the global financial crisis.

"If we compare the same capital inflows of the first two months of this year with the trade balance of the two months of 2008, the result would have lower the balance of payments' surplus below its current value, reaching $290.4 million," Audi said. - The Daily Star