Beirut: The World Bank expects Lebanon's economy to contract by 6.4 percent in 2026, saying the latest war launched by Israel against the country has dealt a setback to efforts to revive the economy.
According to Qatar News Agency, in a recent report, the World Bank said the recovery recorded in 2025 had suffered a "sharp" setback following the escalation of the conflict in March 2026, which caused further damage to homes and infrastructure, triggered large-scale internal displacement, disrupted supply chains, and severely affected tourism and domestic demand.
The report forecasts that inflation will rise to 17.5 percent this year. It noted that Lebanon entered 2026 on a stronger footing after recording real GDP growth of around 4.2 percent in 2025 - the highest growth rate since the financial crisis erupted in 2019.
Commenting on the report, Dalia Khalifa, Director of the Middle East Department at the World Bank, said that moving forward with reforms, particularly in banking sector restructuring and public financial management, would be essential to restoring confidence, safeguarding stability, and securing the financing needed for reconstruction and economic recovery.
The international community has been urging Lebanese authorities to implement financial reforms to secure the economic assistance the country needs.