The year 2011 saw some intense domestic political tension combined with regional political instability that has seriously damaged Lebanon's economic prospects for 2012. Governmental stalemates and unrest in Syria have shaken investors' trust in the country, causing them to pull their money and opt for a wait-and-see tactic that is sure to plunge the country into further economic difficulties.

After achieving staggering growth in the years between 2007 and 2010, with GDP growth reaching 8 percent per year, regional and domestic political shocks brought the growth down to 2 percent in 2011. This has been the worst performance in years, leading many to believe that Lebanon will find itself in difficult economic times should the decline continue.

Lebanon's major source of revenue, tourism, is down 24 percent with the number of tourists falling from 1.85 million to 1.4 million. Ernst & Young recently reported that hotel room reservations in Lebanon fell by approximately 28 percent in 2011 from 2010.

Alongside declining tourism, Lebanon is heavily dependent on foreign capital inflows to finance domestic demand. The susceptibility of Lebanon to instability from the Syrian crisis, however, has led capital inflows to decline by 20 precent, and investment by 15 percent.

The ongoing crisis in Syria has hit Lebanese domestic businesses as they continue to face soaring shipping prices since most international buyers seek to avoid transport through Syria - an expensive undertaking for a country with Lebanon's geography. The cost of shipping one ton of citrus to Saudi Arabia, for example, has risen from 5000 Riyals ($1,333) to more than 10,000 Riyals as companies account for the risk of transporting through Syria.

This in turn hurts Lebanese products because it takes away their competitive edge and makes it less costly for nearby countries to purchase European citrus. Lebanon's farm produce has severely diminished.

Farmers and industrialists are, unfortunately, not the only ones suffering from regional turmoil. After three years of record profits and asset growth, bankers have reported slower gains in profits, deposits, and loans in the first nine months of 2011. Tightened scrutiny over the banks' transactions in compliance with international sanctions has added to the pressure and resulted in more uncertainty.

While Lebanon's economy has a reputation for weathering even the harshest of circumstances, it is most vulnerable to regional turbulence. It will take serious steps for Lebanese leaders to isolate Lebanon from the nearby unrest and raise the economic economic status.