World Bank projects Lebanon economy to contract 6.4% in 2026
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The World Bank projects Lebanon's economy to contract by 6.4 percent in 2026, reversing a 4.2 percent expansion in 2025. The lender attributes the downturn to the March 2026 conflict escalation, which damaged infrastructure, displaced communities, and disrupted supply chains. Inflation is expected to accelerate to 17.5 percent, driven by supply disruptions and volatile fuel prices.
Key Facts
- Lebanon's economy is projected to contract by 6.4 percent in 2026, according to the World Bank.
- The country's GDP grew by 4.2 percent in 2025, its highest real growth since the 2019 financial collapse.
- Inflation is expected to accelerate to 17.5 percent, driven by supply disruptions, elevated shipping costs, and volatile fuel prices.
- The IMF plans to resume technical meetings in Beirut next month to evaluate structural policy measures.
Economic Contraction
The World Bank's Summer 2026 Lebanon Economic Monitor, titled A Conflict-Torn Economy, projects a 6.4 percent contraction in real GDP for 2026. The report attributes the downturn to the March 2026 escalation in conflict, which damaged housing and infrastructure, displaced communities, and disrupted supply chains. Tourism and domestic demand have been particularly hard hit, contributing to the collapse in economic activity.
Inflation and Policy Response
Consumer prices are under renewed pressure, with inflation expected to reach 17.5 percent due to supply disruptions, elevated shipping costs, and volatile fuel prices. World Bank division director Dahlia Khalifa stressed that advancing reforms on banking sector restructuring and fiscal management will be critical to restoring confidence and mobilizing financing for reconstruction. Parliament recently passed amendments to the bank resolution law, and the IMF endorsed the legislative progress as a positive step aligning Lebanon with international best practices. The IMF confirmed it plans to resume technical meetings in Beirut next month to evaluate further structural policy measures.
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World Bank projects Lebanon economy to contract 6.4% in 2026
