LEBANON - Lebanon’s economy is projected to contract by 6.4% in 2026, as renewed conflict reverses the fragile recovery recorded in 2025, according to the World Bank’s Lebanon Economic Monitor, Summer 2026: “A Conflict-Torn Economy.”
The contraction represents a 10.4 percentage-point decline compared with the growth expected under a no-conflict scenario.
Lebanon’s economy grew by 4.2% in 2025, its strongest growth since the start of the 2019 financial crisis. The recovery was supported by stronger consumption, investment and tourism before the renewed conflict disrupted economic activity.
Tourism and consumption hit
According to the World Bank report, the conflict has caused significant losses in tourism revenues and private consumption.
Tourism revenues are estimated to have suffered a $3 billion loss in 2026, while private consumption faced a $570 million shock.
The decline in consumption is estimated to have reduced GDP growth by 5.3 percentage points.
Inflation expected to rise
Inflation is also expected to accelerate in 2026. The World Bank projects inflation at 17.5%, compared with 14.6% in 2025.
The report attributes the increase to supply disruptions, higher shipping costs and rising oil prices linked to regional escalation.
Fiscal position under pressure
Lebanon recorded fiscal and primary surpluses in the first half of 2026; however, the report attributes this to residual growth from 2025 and the settlement of the Corporate Income Tax in May 2026.
For the second half of 2026, the World Bank projects public finances to come under greater pressure during 2026 as humanitarian and reconstruction needs increase, while revenue growth slows due to tax deferrals and a shrinking tax base due to strained economic activity.
The World Bank said advancing reforms, particularly in banking-sector restructuring and fiscal management, is crucial to restore confidence and support Lebanon’s economic recovery.
