BEIRUT- According to Bank Audi's Lebanon Weekly Monitor, Lebanon’s external sector progressed in term of aggregate activity, although merchandise trade, in particular, is becoming increasingly constraining, as the goods trade deficit is continuously expanding. Figures released by the Higher Customs Council show that the aggregate value of imports and exports totaled $11.012 billion in the first seven months of 2008, up by 36.8 percent from $8.048 billion in the same period of 2007.

According to the Weekly Monitor, this advancement was driven to a large extent by an appreciation in the value of imports due to increased oil prices and the depreciation of the US dollar against the euro. The report added that as a result, the trade deficit widened by a yearly 38.4 percent, from $4.990 billion in the first seven months of 2007 to $6.904 billion.

Export activity grew by 34.3 percent to reach $2.054 billion in the first seven months of 2008. Demand for Lebanese products continued to benefit from the ongoing appreciation of the euro against the weakening of the US dollar.

When it comes to imports, on which Lebanon is heavily dependant, this had an adverse effect as their prices went up, the report said, noting that euro-denominated Lebanese imports are almost two times US dollar-denominated imports. Growth in imports surpassed that of exports as it was at 37.4 percent, leading to a total of $8.958 billion in the first seven months of 2008. The increase in imports, within the context of a lower rise in exports, led to slight drop in the export-to-import coverage ratio from 23.5 percent in the first seven months of 2007 to 22.9 percent in the same period of 2008.

The breakdown of exports by country of destination for the first seven months of 2008 indicates that Switzerland was the country with the greater part of Lebanese exports with $235 million, or 11.4 percent of the total. It was followed by the United Arab Emirates with $191 million (9.3 percent), Turkey with $148 million (7.2 percent), Iraq with $129 million (6.3 percent), and Syria with $126 million (6.1 percent).