Minister of Finance:
“The Lebanese are tired of this"

Economy to contract by seven to ten percent

The economy is expected to contract by seven to ten percent this year as the ongoing war between Israel and Hezbollah continues to inflict heavy economic damage, Finance Minister Yassine Jaber told Reuters. His estimate echoes estimations made by InfoPro earlier in the conflict.

“We are tired, our ability to withstand is being tested time and time again and I think the Lebanese are tired of this,” he said.

Jaber said the conflict, which escalated on March 2, could push the economy into a deeper contraction o in 2026, with total direct and indirect losses potentially reaching $20 billion.

The latest estimate adds to already severe losses. According to the World Bank, the 2024 conflict resulted in at least $8.5 billion in physical and economic damage, while real GDP fell 7.1 percent that year. Since 2019, cumulative output has declined by nearly 40 percent, reflecting the depth of Lebanon’s prolonged financial and banking crisis.

Earlier projections by the World Bank had suggested a possible recovery of four percent growth in 2026 if stability returned, reconstruction aid materialized, and reforms advanced. Those expectations are now under pressure as war-related disruptions persist.

Surplus turns into deficit
Jaber said the government had initially expected to record a budget surplus this year but has instead allocated $50 million in emergency spending to support more than one million displaced people. He said the final economic impact will depend on several uncertain factors, including remittance inflows from the Gulf, the performance of the summer tourism season, and whether continued Israeli strikes further damage property and economic activity. Remittances remain a critical pillar of the Lebanese economy, with large numbers of expatriates in Gulf countries regularly sending funds home. However, Jaber warned that regional instability could weaken this lifeline. “This time, the regions where the Lebanese work are themselves affected,” he said.

Support falls short
International financial support has also remained limited compared to previous crises. Jaber said the country received about $700 million in humanitarian assistance during the 2024 war, but current inflows have fallen short of expectations. Despite appeals following a visit by António Guterres, only around $100 million has been secured so far. Additional financing includes a $200 million loan from the World Bank and a €45 million grant from the European Union.

“We are depending on loans today,” Jaber said, noting that grant support has significantly declined. He added that while state revenues are under strain, authorities have so far managed to maintain stability of the lira, providing a rare point of resilience in an otherwise deteriorating economic environment.