|Euro's rise hits Lebanese imports|
|As trade volume falls, businesses mull switch to U.S.-made goods
Currency's continued strength may hurt Europe's role as main trading partner
Europe may lose its position as Lebanon's main trading partner if the euro maintains its dominance over the dollar, economists and merchants said Thursday.
"The Lebanese economy and the purchasing power of the citizens were weakened by the sharp appreciation of the euro against other currencies and especially the dollar, economist Louis Hobeika told The Daily Star.
One euro is now $1.332 on international markets.
Lebanon is one of many countries hard-hit by the euro's rise, as most imports are shipped in from Europe.
Lebanon imports large quantities of cars, cosmetics, clothes, wine, cheese and furniture from the continent.
However, customs officials said that Europe remains the leading trading partner for Lebanon, and that they have not noticed a drop in European imports this year.
Traders, however, said sales volumes have dropped by over 40 percent since the euro surpassed the dollar a year ago.
Most European car dealers, who were already reeling from the high customs and value-added tax charges, also complained that the soaring euro had dealt a blow to profits.
"We cannot switch to European or Japanese cars immediately because we are dealers of European cars," one car dealer said.
He added that spare parts have also become expensive.
"Our wealth is negatively affected by the weakness of the dollar because the purchasing powers of the Lebanese have fallen considerably," said Hobeika. "This means that people who are paid in dollars or Lebanese pounds will have to pay more for the goods coming from Europe."
More than 75 percent of deposits in Lebanese banks are in U.S. dollars, while the rest is in local currency.
"The euro may remain strong for a very long time," Hobeika said. "We must consider diversification so that the Lebanese can afford to buy imported goods."
He added that merchants will eventually have no choice but to switch to U.S.-made goods or else continue to incur heavy losses.
"We will probably have to go to the dollar zone instead of the euro. Only individuals with very a high income will continue to buy European made goods," he said.
Walid Noushi, who owns several stores on Beirut's Hamra Street, said that many merchants have already made the switch to goods produced in the U.S. and Asia.
He added that the there is no guarantee that the euro will fall in the near future.
Ali Sweidan, the owner of several men's clothing stores in Beirut, said that nearly all the clothes on display in his shops come from Italy, France and Germany.
"I have $400,000 worth of goods in my stores, and frankly I don't know what to do if the euro stays stronger than the dollar," Sweidan said.
He added that sales have dropped by more than 40 percent, with only a handful of customers now entering his stores.
Hobeika said Gulf states had not been as hard-hit by the strong euro, due to their higher revenues from skyrocketing oil prices this year.
Beirut,12 06 2004
The Daily Star