Lebanon economy to contract by 6.4 percent due to war, World Bank says
Lebanon economy to contract by 6.4 percent due to war, World Bank says The World Bank projects that Lebanon's economy would contract by 6.4 percent this year, as the ongoing war derailed the country's efforts at recovery. Due to the war, "real GDP is projected to contract by 6.4 percent in 2026, reflecting the collapse in tourism, weaker consumption, disrupted supply chains, heightened…
Lebanon's economy is set to shrink by 6.4 percent in 2026 due to the ongoing conflict, according to projections from the World Bank. The ongoing war has significantly hampered the country's recovery efforts, leading to a projected 6.4 percent contraction in real GDP for this year. This decline is attributed to various factors, including a collapse in tourism, weaker consumption, disrupted supply chains, heightened insecurity, and prolonged displacement.
The report from the World Bank also highlights that inflation is expected to surge to 17.5 percent in 2026, primarily due to supply disruptions, higher shipping costs, and rising oil prices. These inflationary pressures will further erode people's purchasing power.
Prior to the latest conflict, Lebanon's economy had shown signs of strengthening, with an estimated real GDP growth rate of 4.2 percent in 2025, marking the fastest growth since the 2019 financial crisis. However, the ongoing war has posed significant challenges, making it crucial to advance reforms, particularly in banking sector restructuring and fiscal management.
These reforms are essential to restoring confidence, safeguarding stability, and mobilizing the necessary financing for reconstruction and recovery efforts in the war-torn nation, as emphasized by Dahlia Khalifa, the World Bank's Middle East director.
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