World Bank predicts Lebanon's economy will shrink in 2026

The World Bank projects that Lebanon's economy will contract by 6.4% in 2026 due to renewed conflict, following a growth of 4.2% in 2025. The escalation in March 2026 led to a decline in economic stability, with inflation rising to 17.5% and financial conditions deteriorating. Growth is expected to be 10.4 percentage points lower than the baseline scenario if calm had continued. Additionally, the destruction of infrastructure, population displacement, deterioration of the tourism sector, and reduced productive capacity will all negatively impact future growth, compounded by ongoing public debt and a weak banking sector. The report emphasized the importance of reforms, including restructuring the banking sector and managing public finances, to restore confidence and achieve recovery.

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