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World Bank projects Lebanon economy to contract 6.4% due to war
🇸🇦 Saudi Arabia /Economy & Trade

World Bank projects Lebanon economy to contract 6.4% due to war

From Asharq Al-Awsat · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • The World Bank projects Lebanon's economy to contract by 6.4% in 2026 due to the ongoing Israel-Hezbollah war.
  • The conflict has disrupted tourism, consumption, and supply chains, leading to projected inflation of 17.5% this year.
  • The World Bank urges Lebanon to advance reforms, particularly in banking and fiscal management, to restore confidence and secure recovery funding.

Lebanon's economy faces a projected contraction of 6.4% this year, according to the World Bank, as the latest Israel-Hezbollah war cripples recovery efforts. The nation, already grappling with an unprecedented financial crisis since 2019, was further destabilized by the conflict initiated in March.

real GDP is projected to contract by 6.4 percent in 2026, reflecting the collapse in tourism, weaker consumption, disrupted supply chains, heightened insecurity, and prolonged displacement.

— World BankThe World Bank's report detailing the economic impact of the war on Lebanon.

The war's impact is far-reaching, with the World Bank citing a collapse in tourism, weaker consumption, disrupted supply chains, heightened insecurity, and prolonged displacement as key factors. Inflation is also expected to surge to 17.5% this year. This downturn follows a period of estimated 4.2% real GDP growth in 2025, which was the fastest since the 2019 crisis began.

the fastest since the onset of the 2019 financial crisis

— World BankDescribing Lebanon's economic growth in 2025 prior to the latest conflict.

Dahlia Khalifa, the World Bank's Middle East director, emphasized that "advancing reforms -- particularly on banking sector restructuring and fiscal management -- will be critical to restoring confidence, stability, and mobilizing the financing needed for reconstruction and recovery." The international community has consistently called for these reforms to unlock essential economic aid.

Advancing reforms -- particularly on banking sector restructuring and fiscal management -- will be critical to restoring confidence, protecting stability, and mobilizing the financing needed for reconstruction and recovery.

— Dahlia KhalifaThe World Bank's Middle East director, on the necessity of reforms for Lebanon's economic recovery.

Lebanese authorities recently passed amendments to a bank resolution law, a move welcomed by the International Monetary Fund as a "very good step." The IMF is set to resume its discussions in Beirut next month, signaling continued engagement with the country's ongoing efforts to address its financial crisis.

a very good step that reflects Lebanon's commitment to aligning its legislation with the best international practices

— International Monetary FundWelcoming Lebanon's amendments to a bank resolution law.
DistantNews Editorial

Originally published by Asharq Al-Awsat in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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