A slow tourist season, and a tumultuous political environment, have dealt a blow to the rapid economic growth that Lebanon has been witnessing since 2010. The Lebanese trade deficit has widened by 4 percent in the first seven months, according to the  Lebanese Finance Ministry, as imports continue to rise while exports fail to be shipped to regional markets.

Lebanon had for months successfully evaded the worldwide economic slump, which hit several middle-income and developing markets. However, the Lebanese economy has not been faring well since the start of the regional uprisings. The Syrian revolt has had the most impact, as it led to the decline of Lebanese imports, which are usually transported to Arab countries through Syrian-Lebanese borders.

Regional turmoil and domestic instability has also kept tourists at bay. A new survey by Ernst & Young on regional hotel occupancy showed a 74 percent decline in Lebanese hotels rates since the start of the year. While this is an alarming drop for a country whose economy is based primarily on services and tourism, remittances from the Lebanese diaspora keep the economy afloat.

The economic downturn takes shape as the cost of living in Lebanon continues to rise. The price of commodities has reportedly increased by 18 percent in the last six months. Inflation in energy and food prices, and the rigidity of the minimum wage, have driven labor transportation unions to protest. The private sector and government are skeptical of the proposed increase of the minimum wage, despite the reported increase in the cost of living. Inflation is expected to reach 3 percent next year, which is roughly what the GDP growth rate is projected to be.

Lebanese Central Bank governor Riad Salameh is hoping to create an environment conducive to business, which would attract capital flow. The Global Competitiveness report showed better ranking for Lebanon this year, testifying to the country's financial market development and business sophistication. Additionally, in a bid to reinforce investors' trust, Lebanese banks have updated laws to fight money laundering and terrorist funding, negating recent reports that Syrian leaders had transferred funds into Lebanese banks due to new sanctions imposed on the Syrian government during the uprising.

The current situation poses a challenge for the current Mikati government. The cabinet had pinned its hopes on economic progress, after years of political bickering between the March 8 and March 14 camps left the economy on the back burner. With a recently passed $1.2 billion energy bill, slow GDP growth and no solution for regional turmoil on the horizon, the trade deficit is expected to worsen, resulting in more frustration and a challenge to the cabinet's performance.