Ceasefire halts business decline
but upturn is an uphill battle

Clinical death or a path to recovery?

The first half of 2026 has dealt a devastating blow to the economy, leaving key sectors reeling from the latest outbreak of war. A fragile ceasefire and major regional trade breakthroughs offer a glimmer of hope for the remaining six months of the year. Business leaders across commerce, tourism, agriculture, and industry warn that a return to normal will be an uphill battle, plagued by deep psychological scars, lost seasons, and structural damage.

First semester: Harsh contraction
The first six months of the year were characterized by a severe slump across all economic indicators, particularly following the escalation of hostilities in March.

According to Marwan Barakat, Group Chief Economist and Head of Research at Bank Audi, the economy has been under the adverse spillovers of war effects since the beginning of March. "While the year 2026 started with a buoyant macro performance, a trend reversal occurred after the second month. All indicators turned from a growth mode to contraction as a result of sluggish demand for goods and services," he said. Despite an inflationary price effect, imports declined by six percent in March and April relative to the same period last year, a sharp reversal from the first two months of the year which recorded an annual growth of 33 percent from the same period last year. Barakat said that the Balance of Payments (BoP) saw a deficit of $200 million in March and April as a result of the decline in all inflows to the country, especially remittances, FDI, touristic receipts, and exports. BoP had a surplus of $300 million in January and February.

Mohamed Choucair, Chairman of Economic Organizations, described the period—especially March and April—as very difficult and “truly lamentable across all sectors.” He said that the nightlife sector completely died and a pervasive fear among people to spend gripped the nation.

The retail and manufacturing sectors felt this contraction acutely. According to Nicolas Chammas, Chairman of the Beirut Traders Association, overall retail activity declined by 30 percent to 40 percent compared to 2025, with durable goods crashing by an estimated 50 percent.

In the industrial sector, Salim Zeenni, Chairman of the Association of Industrialists, revealed a staggering sharp decline in the markets. He said: “the local market dropped by more than 60 percent” across the board, while exports were cut by about half due to regional bottlenecks like the Hormuz Strait and critical market closures.

No sector, however, experienced a more violent reversal of fortune than hospitality. Hotel occupancy rates plummeted to a dismal ten percent to 15 percent, according to Pierre Achkar, Chairman of the Federation of Tourism Syndicates. With hotels requiring a 40 percent to 50 percent occupancy rate just to break even, the sector faced ruin, particularly in the geography stretching from the airport to the southern border and across the Bekaa, where many establishments were destroyed or forced to shut down entirely.

Tony Ramy, Chairman of the Syndicate of Owners of Restaurants, Cafés, Night-Clubs, and Pastries, said that the year began with a “mind-blowing start,” recording 25 percent growth in January and February. That momentum evaporated instantly. “The resumption of the war on March 2 abruptly reversed this positive trend,” Ramy said, sending the restaurant sector into a sharp decline of more than 85 percent over the next four months.

In the fields, agriculture faced literal and financial scorching. Ibrahim Tarshishi, Chairman of the National Farmers' Union, reported massive physical destruction, fleeing labor, and isolated agricultural regions. Major distribution points like the Tyre (Sour) vegetable market were completely destroyed, while the country’s largest market in the Southern Suburb (Dahiyeh) suffered constant operational instability due to evacuation warnings. Tarshishi said that farmers faced a devastating double blow: "Cost increased by more than 100 percent on fuel, seeds, and fertilizers, accompanied by a decrease in prices,” forcing many to sell their crops at 50 percent of their production cost due to local market stagnation and a displaced population estimated in the hundreds of thousands.

Second semester: slow recovery
Looking ahead to the next six months under the assumption that the ceasefire holds, business leaders express a mix of structural optimism and deep-seated caution.

Bank Audi forecasts real GDP to contract by five percent in the full-year 2026 if the ceasefire persists. Such a moderate contraction is tied to the short conflict period that will allow the economy to stabilize post-settlement and build on upcoming summer and holiday seasons. Imports will revolve around $20 billion and exports will come close to $3 billion, helped by the recent Saudi decision to remove the ban on Lebanese exports.

For tourism and hospitality, the immediate outlook remains grim despite the halt in fighting. Pierre Achkar said: “The summer season is practically lost,” pointing to the total cancellation of major festivals in Baalbek, the Cedars, and Beiteddine, alongside the fact that 50 percent of Diaspora expats from North America and Australia canceled their bookings months ago. Tony Ramy echoes this grim assessment, projecting a remaining 60 percent to 70 percent decline for the second half of the year. He cautions that the political status quo without a final peace agreement is “a state of clinical death... a cold war for us.” He said that occasional weekend crowds on a few streets should not be mistaken for a functioning tourist economy.

Nicolas Chammas expects the retail slump to ease only slightly to a 15 percent to 25 percent decline, as a tense political climate, diminished disposable incomes, and the ongoing displacement crisis mean “there is no momentum for a serious economic recovery.” However, there are profound reasons for hope in the trade and manufacturing sectors, driven primarily by major diplomatic breakthroughs as Saudi Arabia officially reopened its markets and land routes to Lebanese products after a five-year ban.

For agriculture, which relies entirely on exporting surplus crops like potatoes, apples, and bananas to survive, this is a monumental lifeline. Tarshishi called it “very good news,” expressing hope that “maybe our Lord is compensating us a little, and the farmer will return to his normal life and his good days.” Mohamed Choucair also emphasized that the Saudi opening, alongside recent positive travel decisions from the UAE, has provided a major morale boost that could help save thousands of seasonal businesses from total disaster by September.

In industry, Salim Zeenni believes that while “it won't be easy to pick up this time” because the damage from this war has accumulated on top of multiple consecutive past crises, a sustained truce will allow manufacturers to recover part of the losses. Zeenni forecasts that by the end of the year, a stable market could successfully narrow its cumulative losses from a 50 percent drop down to an overall 20 percent or 25 percent decline.

The consensus among business leaders is clear: a maintained ceasefire is a necessary baseline, but true economic revival hinges on internal political stability and permanent peace. Choucair said: “We hope that everyone wakes up and puts Lebanon first, and thinks about our interest, our state, and our country.”