The World Bank has projected that Lebanon’s economy will contract by 6.4 percent this year, a significant downturn following a brief recovery in 2025. This contraction is largely attributed to the escalation of conflict with Israel, which has disrupted tourism, domestic demand, and supply chains, leading to increased inflation and consumer prices.
Lebanon had entered 2026 on a positive note, with a 4.2 percent GDP growth in the previous year, marking its highest growth since the 2019 financial collapse. However, the recent conflict has severely impacted housing and infrastructure, displacing communities and exacerbating economic instability.
Inflation is expected to rise to 17.5 percent due to supply disruptions and elevated shipping costs. The World Bank emphasizes the need for urgent reforms in banking and fiscal management to restore confidence and mobilise financing for recovery efforts.
Despite the grim outlook, some experts believe that economic stability is achievable if political and security conditions improve. They point to the potential for recovery once the conflict subsides, highlighting the resilience of Lebanon’s private sector and individual initiatives.
Source: Al Jazeera
