World Bank projects Lebanon’s economy to contract by 6.4% due to war

The World Bank has warned that Lebanon's economy is set to contract by 6.4% in 2026 due to ongoing conflict in the region. The Middle East nation has been struggling with an economic crisis since 2019 and had already been grappling with the aftermath of the 2024 Israel-Hezbollah war when it became embroiled in the latest conflict.

This new war has disrupted tourism, weakened consumer spending, and disrupted supply chains, leading to reduced economic activity. Inflation is also projected to rise to 17.5% this year, further squeezing people's purchasing power. Before the latest conflict, Lebanon's economy was showing signs of recovery, with an estimated growth of 4.2% in 2025.

However, to restore confidence and secure the necessary financing for recovery, significant reforms are needed, particularly in the banking sector and fiscal management. The World Bank and the International Monetary Fund have been pushing for such reforms and have welcomed recent amendments to a bank resolution law aimed at restructuring the troubled banking system.