World Bank Reports: Beirut Explosion Caused Up to US$8.0 Billion in Damages to Infrastructure and Physical Assets
The Beirut explosion has caused material damage and economic losses up to US$8.1 billion, and Lebanon urgently needs US$605 to US$760 million in the immediate term until December 2020 to recover, according to a published report by the World Bank, informs Agence France-Presse, quoted by Agerpres.
The August 4 explosion, which resulted in a thick cloud of mushroom smoke, killed 178 people, injured another 6,000, and caused 3.8 billion to US$4.6 billion in damage to physical stock. Losses including changes in economic flows as a result of the decline in the output of the economic sectors are estimated to be in the range of US$2.9 and US$3.5 billion.
According to World Bank, the worst-hit sectors are housing, transportation, and cultural assets (including religious and archeological sites, national monuments, theaters, archives, libraries, monuments).
The estimated number for immediate reconstruction (by the end of the year) is between US$650 and US$760 million and a range between US$1.18 and US$ 1.46 billion for 2021. The transport sector’s needs are the highest, followed by culture and housing.
At the macroeconomic level, the World Bank warns that “the explosion has caused three major economic effects: losses in economic activity caused by the destruction of physical capital; trade disruptions; and losses in fiscal revenues for the Government.” Consequently, according to World Bank forecasts, Lebanon’s Gross Domestic Product expects a decline of 0.4 points in 2020 and 0.6 points next year.
Even before the explosion, Lebanon was facing a crisis on several levels (economic, financial, and monetary), intensified by the effects of the Covid-19 pandemic, which led the World Bank to anticipate a 10.9 percent decline in GDP in 2020.
“The catastrophe will not only provoke the contraction of economic activity but will also worsen poverty, which has already affected 45 percent of the population before the explosion.”
Given Lebanon’s state of insolvency and lack of sufficient foreign exchange reserves, international aid and private investment will be essential for comprehensive recovery and reconstruction.
A prior external linkage to Beirut, Lebanon, was the Rhosus Moldovan-flagged ship, which allegedly transported the 2,700 tons of ammonium nitrate that exploded in the port area of Beirut, as told in an article by Ziarul de Garda.