Lebanese economy projected to contract by at least 7% due to war, finance minister tells Reuters

The ongoing war between Israel and Hezbollah is expected to shrink Lebanon's economy by at least 7% this year and could cost the country an estimated $20 billion, Finance ‌Minister Yassine Jaber told Reuters.

In an interview on Wednesday, Jaber said he expected the current war to prompt an economic contraction of between 7% and 10% in 2026, and that direct and indirect damage to Lebanon could total as much as $20 billion.

Jaber said the government had been hoping for a budget surplus this year, but instead had allocated $50 million in public funds to support more than 1 million people displaced by the war.

Jaber said the full extent of the war's economic damage to Lebanon would be determined by remittance inflows from the Gulf, the success of this summer's tourist season and whether Israeli strikes would continue to destroy properties and livelihoods in Lebanon.

Remittances are a cornerstone of Lebanon's economy, with hundreds of thousands of Lebanese in Gulf capitals sending money back home or returning for the holidays to spend their earnings.

But as Gulf economies come under pressure from ⁠the Iran war, Jaber is worried that Lebanon's expats will be unable to sustain this role.

"This time, the regions where the Lebanese work are themselves affected," he said.

"We are depending on loans today," Jaber said. "We are not getting ⁠a lot of grants."

State revenues are also down, he said, but the government has been able to maintain the value of the Lebanese pound against the dollar, a rare bright spot in an otherwise bleak economic outlook.

“We are tired, our ability to withstand is being tested time and time again and I think the Lebanese are tired of this," Jaber said.

Reuters