🔻World Bank: Lebanon’s economy will shrink by 6.4% this year

🔻World Bank: Lebanon’s economy will shrink by 6.4% this year

The World Bank has predicted that Lebanon’s economy will shrink by 6.4% this year amid the recent war between Israel and Hezbollah—an war that has halted the country’s economic recovery.

The institution said in a report that the war has caused a collapse in tourism, lower consumption, disruptions to supply chains, increased insecurity, and the continuation of displacement.

The World Bank also predicted that Lebanon’s inflation rate in 2026 will reach 17.5%. Higher transport costs, supply disruptions, and rising oil prices were cited as the main factors behind this increase.

Lebanon’s economy had shown signs of improvement before the outbreak of the recent hostilities, and the country’s GDP grew by about 4.2% in 2025; the highest growth rate since Lebanon’s financial crisis began in 2019.

The World Bank said that advancing reforms—especially rebuilding the banking system and managing finances—is necessary to restore confidence and secure the resources needed for rebuilding and improving Lebanon’s economic conditions.

Last week, Lebanon’s parliament approved reforms to the law related to organizing banks that are in crisis; a move welcomed by the International Monetary Fund. The IMF says that its talks with Lebanon’s officials will resume in Beirut next month.