Lebanon’s economy is projected to shrink by 6.4% in 2026 after Hezbollah’s decision to return to war with Israel wiped out the early recovery achieved in 2025, according to the latest World Bank Lebanon Economic Monitor report.
The report, titled “A Conflict-Torn Economy,” estimated that Lebanon’s real gross domestic product (GDP) expanded by 4.2% in 2025, marking its strongest growth since the onset of the country’s financial crisis in 2019.
The 2025 recovery was driven by stronger private consumption, investment and tourism, alongside improvements in high-frequency economic indicators. However, the recovery was sharply interrupted by Hezbollah’s decision to renew conflict in March 2026, which caused further damage to housing and infrastructure, displaced communities, disrupted supply chains, and weighed heavily on tourism and domestic demand.
Around 360,000 people remain…
