Lebanon’s economy barely catches its breath before another crisis hits, tightening the squeeze and deepening its fragility.
The current war has wiped out efforts to revive it, as the country still reels from the 2019 financial collapse, the coronavirus pandemic, the Beirut port blast, and the 2023-2024 war.
After successive governments failed to resolve its structural crisis, the latest military escalation has further weakened the economy and stalled reform efforts, despite the current government's attempts to lay out recovery plans and legislation.
Since the first week of the war, some businesses have halved employees’ working hours to cut wages, while others have shut down entirely, aside from those destroyed in Beirut’s southern suburbs and the south.
The impact has been immediate, with many workers still earning less than half their pre-2019 salaries.
Losses of $100 million a day
Nicolas Chammas, secretary-general of the Lebanese Economic Organizations and head of the Beirut Traders Association, described the war’s impact as “huge,” compounded by years of strain since 2019.
“In 2025, economic growth reached 5%, but that followed a 7% contraction in 2024,” Chammas told Asharq Al-Awsat. “We had already started this year on a negative footing, and the current war has worsened conditions.”
According to the World Bank, the 2024 war cost $14 billion, or about $225 million a day.
“Using that as a benchmark, the current war is costing roughly $100 million a day,” he said, citing damage to infrastructure, reduced economic activity, and the cost of sheltering and assisting displaced people.
Chammas said tourism and travel were among the hardest-hit sectors, with travel down by more than 80%.
“Hotel occupancy is now below 10%, and declines are also severe in car rentals, furnished apartments, and resorts,” he said. “The industrial and commercial sectors are also affected, with the latter down around 50%.”
If the war continues, he warned, growth could flip into a contraction of up to 10%.
Structural contraction
Economist Jassem Ajaka said the war has shifted the downturn from “monetary” to “structural.”
“Under full dollarization, the shock no longer shows in a currency collapse, but in paralyzed economic activity and higher operating costs,” he told Asharq Al-Awsat.
He put total losses from the previous and current wars at about $15 billion, direct and indirect, based on World Bank estimates and updated research for 2026.
With Brent crude above $115, production and dollarized service costs have risen by more than 40%, eroding companies' profit margins, he said.
The agricultural sector has been the hardest hit geopolitically, with losses of about $2.5 billion due to destroyed land and disrupted supply chains. Tourism revenues have fallen 74% compared with the 2024 season, depriving the economy of a key source of foreign currency.
Ajaka said recent Banque du Liban data showed external assets holding at about $12.07 billion, supported by liquid foreign securities.
But he warned that a prolonged war and high oil prices would gradually drain those assets to cover fuel and essential imports, threatening this “artificial stability” in the second half of the year if reserves fall below safe levels.
Latest figures
Ajaka said 30% of small and medium-sized businesses had shut down permanently by the first quarter of 2026, unable to cover dollarized operating costs amid weak demand.
Those still operating have shifted to “emergency cash flow management,” with some paying half salaries or flat dollar wages worth no more than 40% of previous levels.
Unemployment has surged to between 46% and 48%, driven not only by business closures but also by the inability of productive sectors to absorb labor costs amid rising global energy and input prices.
