In its Spring 2025 issue titled “Turning the Tide?”, the World Bank’s (WB) Lebanon Economic Monitor (LEM) featured a special analysis of real effective exchange rate (REER) dynamics. This topic has drawn growing attention since the onset of the financial crisis, which put Lebanon’s large trade deficit under the spotlight. Many economists argue that a chronically overvalued REER played a pivotal role in undermining Lebanon’s product competitiveness prior to the crisis. This analysis examines how both REER misalignments—overvaluation and undervaluation—have influenced Lebanon’s goods trade performance (excluding services) and assesses whether these shifts aligned with global trade patterns and theoretical expectations.
For the full report, click on the below link:
From Theory to Practice – When a Weaker Currency Doesn’t Boost Exports – The Case of Lebanon