Bank customers, largely locked out of their foreign-currency accounts ater the financial crisis of 2019, gather at Martyrs' Square in late July before marching toward the Sin el-Fil suburb east of Beirut, where several bank facades were vandalized. Photo by Abbas Salman/EPA
BEIRUT, Lebanon, Aug. 21 (UPI) -- The World Bank said Friday that the recent Israel-Hezbollah conflict has severely disrupted Lebanon's fragile recovery, predicting a 6.4% contraction in the crisis-ridden economy this year and a rise in inflation to 17.5%.
The international financial institution said in a report that Lebanon entered 2026 "on firmer footing," after an estimated 4.2% expansion in real gross domestic product in 2025.
It was the country's fastest growth since the onset of the 2019 financial crisis, driven by stronger consumption, investment and tourism, as well as improved high-frequency indicators, according to the report.
It noted that the rebound was sharply interrupted by the military escalation between Hezbollah and Israel on March 2, causing further damage to housing and infrastructure, displacing some 1.2 million people, disrupting supply chains, and severely affecting tourism and domestic demand.
