World Bank warns Lebanon economy to shrink 6.4 percent amid Israel conflict

Lebanon's economy is expected to contract by 6.4 percent, according to fresh projections from the World Bank, as the country grapples with the fallout from escalating conflict with Israel. The forecast underscores mounting concerns about the viability of Lebanon's economic stabilization efforts at a critical juncture.

The global lender cited multiple headwinds weighing on the Lebanese economy, including surging inflation and climbing consumer prices that are eroding purchasing power among households already strained by years of financial crisis. The conflict has disrupted economic activity and investment flows at a time when the nation was attempting to recover from its worst economic collapse in modern history.

Lebanon has endured a severe financial crisis since 2019, characterized by currency collapse, banking sector deterioration, and widespread poverty. International observers had hoped the country might stabilize through structural reforms and external support. However, the renewed military tensions pose a significant risk to those recovery prospects, threatening to deepen economic hardship for the Lebanese population and complicating efforts by authorities to implement stabilization measures.

The World Bank's assessment reflects broader international concern about the humanitarian and economic consequences of the conflict for one of the region's most economically vulnerable nations. Lebanon's fiscal position remains precarious, and renewed economic contraction could force difficult policy choices for policymakers navigating the dual crises of war and economic instability.