World Bank Forecasts 6.4% Economic Contraction in Lebanon

The International Monetary Fund (IMF) has warned that the recent flare‑up with Israel has stalled Lebanon’s fragile economic recovery, citing a sharp rise in inflation and consumer prices. The short‑term conflict disrupted supply chains, increased the cost of imported goods, and heightened uncertainty among investors and consumers alike. According to the IMF, inflation has climbed to levels that outpace the country’s modest gains from the 2023 recovery plan.

Lebanon’s economy has been in crisis for years, with a banking collapse, a collapsed currency, and a debt burden that exceeds 150 % of GDP. The IMF’s latest assessment notes that the new conflict has amplified these structural weaknesses, pushing food and fuel prices higher and eroding household purchasing power. The agency stresses that without a sustained cease‑fire and a comprehensive economic strategy, the country’s prospects for stabilizing its currency and reducing inflation remain bleak.

In light of these developments, the IMF recommends that Lebanon pursue urgent fiscal and monetary reforms, secure additional international assistance, and work toward a durable political settlement. The agency also urges the government to protect essential imports and support vulnerable households while it navigates the dual challenges of conflict and economic distress.