"The government, instead of scaling down its expenditure, tended to rely more and more on borrowing"

Samir Makdisi

Now, the recent unrest in the Middle East is unlikely to help the Lebanese economy, which some experts now fear could sink into the same kind of chaos which has beset Turkey and Argentina.

Samir Makdisi, professor of economics at the American University of Beirut, says the lack of an overall Middle East peace process has hit investments with disastrous results.

"The government, instead of scaling down its expenditure, tended to rely more and more on borrowing", he said.

"In the process, the public debt began to accumulate and now it has reached the horrendous ratio about 170% of public debt to GDP, which is one of the highest - if not the highest in the world," he added.

Lebanese suffering

The real effect of this on the Lebanese population has been dramatic.

More than a quarter of Lebanon's four million people live below the poverty line.

Emigration is increasing and unemployment is thought to be around 25%.

Thousands of Syrians travel to Lebanon to work for low wages, undercutting the Lebanese.

When the Israel occupation ended, hopes were high for economic development, but some of these proved unfounded.

The area previously occupied by Israel included a leisure site in south Lebanon, by the River Litani.

Despite its agricultural potential, development there was halted for more than 20 years.

Hopes were high when the Israeli's withdrew last year, but their departure added to Lebanon's economic misery.

Guiseppe Papuli, who works with the United Nations industrial development organisation in Beirut, says that whilst Israel occupied the area, residents used to go and work in Israel.

Rafiq Hariri: struggling with the economic downturn

"When the Israelis pulled out, those people lost their jobs. This is an additional economic pressure on that part of the country which needs to be addressed," he added.

Tourism boost?

Many hoped that tourism would also help the economy regain its balance.

But the sector continues to struggle.

Vivianne Sarkis, sales manager for the privately-owned Bristol Hotel, says competition depresses rates.

"You have too much supply. Less demand. We don't want to stand here with empty rooms" she says, "so the prices go down and there is so much competition that everybody is doing the same - it's just a matter of economy and marketing."

Brighter future?

However, Solidere, the company set up to rebuild downtown Beirut, sees a brighter future.

Solidere made a loss of more than $30m last year.

But with its founder, Rafiq Hariri, back as Prime Minister, Solidere's general manager, Mounir Douaidy is optimistic.

"We have increasing rental income. We have decreasing overheads and therefore we should see profits again and that should no doubt reflect positively on the share price," he said.