The 2025 recovery was driven by an improvement in consumption, investment, tourism, and a number of economic indicators. However, the renewed conflict in the south caused more damage to housing and infrastructure, population displacement, disruption of supply chains, and put severe pressure on tourism and local demand, which threatened the treasury with a deficit again, despite the reforms undertaken by the government, an increase in revenues, and the government being forced to care for displaced Lebanese.
It was noted at the end of last August that negative indicators appeared, especially in the tourism sector, which was relied upon during this summer, with the introduction of hard currency to support the Lebanese economy, but the continuation of the conflict in the south led to a decline in tourism revenues, due to the decline in the number of expatriates in anticipation and fear of the following.
In addition, it is also noted that imports have increased significantly, compared to a decline in the volume of exports and a decline in domestic consumption, due to the weak purchasing power of citizens, who benefited from the increase in salaries for public sector employees, in order to activate the economic cycle, but they collided with two factors: the first is that the government has divided the effects of these salaries in installments, and secondly they see the extent of the dissolution of these salaries in view of the current inflation, which has reached about 18 percent.
The Director of the World Bank for the Middle East, Dalia Khalifa, said, “Lebanon’s fragile recovery has suffered a severe setback due to the renewed conflict, which has exacerbated the already existing social and economic crisis.”
She stressed that “proceeding with reforms, especially restructuring the banking sector and public finance management, will be crucial to restoring confidence, protecting stability, and securing the necessary financing for reconstruction and recovery.”
Thus, the report charts an economic path completely opposite to what Lebanon began in 2026: from growth of 4.2 percent in the previous year and hopes of stabilizing the recovery, to an expected contraction of 6.4 percent, with a more profound warning that the effects of the conflict may exceed the current year’s numbers, to weaken the economy’s ability to grow for years to come.
