30.05.2026
Lebanon’s economy showed signs of a fragile rebound in 2025, supported by tourism, construction, consumption and some progress on financial-sector reform. However, the outlook for 2026–2027 is highly uncertain after the escalation of regional conflict, renewed military operations, large-scale internal displacement and disruption to tourism and transport. Inflation has fallen dramatically from crisis levels but remains high, while public debt is still unsustainable and the banking-sector crisis remains unresolved. The fiscal position appears balanced on a cash basis, but this partly reflects debt default, compressed spending and incomplete reporting rather than full fiscal normalisation.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 3.5 | -2.5 | 1.5 |
| Inflation (%, yoy) | 14.6 | 22.0 | 15.0 |
| Employment rate (% of working-age population, 15+) | 36.5 | 35.5 | 35.8 |
| Fiscal balance (% of GDP) | 0.0 | -1.5 | -1.0 |
| Gross public debt (% of GDP) | 155.2 | 160.0 | 158.0 |
| Current account balance (% of GDP) | -15.8 | -18.0 | -16.5 |
Fragile rebound is interrupted by renewed conflict
Lebanon’s real GDP is estimated to have grown by 3.5% in 2025, after a sharp contraction in 2024. Activity improved in the second half of 2025, supported by construction, tourism-related indicators, consumption and stronger payment activity. Passenger arrivals, cement deliveries and construction permits all pointed to a temporary rebound before the renewed escalation.
The 2026 outlook is much weaker. Military operations, internal displacement, flight disruptions and uncertainty are expected to weigh heavily on tourism, consumption and investment. A modest recovery in 2027 is possible if the conflict de-escalates and reconstruction begins, but output will remain far below pre-crisis levels.
Inflation falls from crisis levels but remains high
Inflation declined sharply to 14.6% in 2025, helped by exchange-rate stability since 2023 and the near-dollarisation of many consumer prices. However, domestic service prices, especially rent, education and health, continued to rise quickly.
Inflation is expected to rise again in 2026 as conflict-related disruptions, higher freight rates, oil prices and shortages increase costs. Price pressures could ease in 2027 if the exchange rate remains stable and supply conditions improve, but inflation will remain elevated compared with normal pre-crisis levels.
Debt remains unsustainable and fiscal data are incomplete
The fiscal balance was close to zero in 2025 on a cash basis, supported by improved tax compliance, spending restraint and low interest payments after the 2020 sovereign default. However, this does not mean that fiscal sustainability has been restored. Official figures exclude some externally financed spending, and Lebanon remains shut out of international capital markets.
Public debt remains unsustainable, at around 155% of GDP in 2025. Debt dynamics in 2026–2027 will depend on nominal GDP, exchange-rate stability, bank restructuring, sovereign debt negotiations and the scale of emergency and reconstruction spending. Without a credible fiscal framework and debt restructuring, Lebanon’s public finances will remain highly fragile.
External position remains deeply vulnerable
The current account deficit remained very large in 2025, estimated at 15.8% of GDP. The goods trade deficit widened sharply, while tourism receipts, remittances and informal inflows partly offset the imbalance. Balance-of-payments data remain weak, making the true external position difficult to assess.
The deficit is likely to widen in 2026 because of higher energy imports, disrupted tourism, reconstruction needs and weaker services receipts. Lebanon remains dependent on remittances, aid flows, informal foreign-exchange channels and imports financed outside the formal banking system. External buffers are therefore fragile despite some reserve accumulation.
Overall outlook
Lebanon’s outlook remains highly uncertain and tilted to the downside. The economy showed some signs of recovery in 2025, but renewed conflict, displacement and transport disruption are likely to derail momentum in 2026. The core problems remain unresolved: banking-sector losses, sovereign default, weak institutions, unsustainable debt, poor public services and high poverty. A durable recovery will require de-escalation, bank restructuring, a credible fiscal framework, debt restructuring, improved governance and restoration of confidence in the financial system.
Sources:
World Bank, Lebanon Macro Poverty Outlook, April 2026.
World Bank, Lebanon Economic Monitor, Winter 2025: A Fragile Rebound.
World Bank, Lebanon Economic Monitor, Spring 2025: Turning the Tide?
International Monetary Fund, IMF Staff Concludes Visit to Lebanon, February 2026.
International Monetary Fund, World Economic Outlook, April 2026.
Lebanese Ministry of Finance, Fiscal and Public Debt Data, 2025–2026.
