World Bank projects 6.4% economic contraction for Lebanon
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The World Bank reported that Lebanon’s economy is projected to contract by 6.4% in 2026, reversing a 4.2% growth trend from the previous year. This downturn follows the military escalation between Hezbollah and Israel that began on March 2, which resulted in 4,348 deaths, 12,703 injuries, and the displacement of 1.2 million people. The conflict caused extensive damage to housing and infrastructure, specifically destroying 70 border villages, and disrupted key economic drivers such as tourism and domestic demand.
Consequences
The economy faces further strain as inflation is expected to reach 17.5% due to supply chain disruptions, increased shipping costs, and rising oil prices. Additionally, the government’s public finances are under pressure from surging humanitarian and reconstruction needs, hindering the country's ability to recover from its long-standing financial crisis.
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