World Bank projects Lebanon economy to contract by 6.4%
AgenciesThe World Bank on Friday projected that Lebanon’s economy would contract by 6.4 percent this year, as the latest Zionist entity-Hezbollah war derailed the country’s efforts...
The World Bank has announced that Lebanon's economy is expected to shrink by 6.4 percent in 2026 due to the ongoing conflict with the Zionist entity and Hezbollah. This downturn is attributed to the collapse in tourism, weaker consumption, disrupted supply chains, increased insecurity, and prolonged displacement caused by the war. Inflation is projected to rise to 17.5 percent this year, exacerbated by supply disruptions, higher shipping costs, and rising oil prices, further diminishing people's purchasing power.
Prior to the conflict, Lebanon's economy showed signs of improvement, with a real GDP growth rate of 4.2 percent in 2025, the fastest since the 2019 financial crisis. To restore confidence, stabilize the economy, and secure the necessary financing for reconstruction, reforms such as banking sector restructuring and fiscal management are deemed essential, according to Dahlia Khalifa, the World Bank's Middle East director.
The international community has been urging Lebanese authorities to implement financial reforms to qualify for much-needed economic aid. Recently, parliament passed amendments to a bank resolution law aimed at restructuring troubled banks and addressing the country's banking crisis. The International Monetary Fund (IMF) endorsed the law, recognizing Lebanon's commitment to aligning its legislation with international best practices.
Lebanon is currently engaged in discussions with the IMF, which has indicated it will resume its meetings in Beirut next month.
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