Lebanon faces an economic crisis of unprecedented magnitude as the ongoing Israeli conflict intensifies, with preliminary estimates placing the country’s losses between $10 billion and $20 billion. The severe discrepancies in these estimates highlight the significant uncertainties and difficulties in accurately assessing the full economic impact. 

According to Asharq Al-Awsat newspaper, local and international experts agree that reliable economic data is nearly impossible to gather at present, as the Israeli airstrikes and military operations continue. An estimated 1.4 million people—nearly a quarter of Lebanon’s population—have been displaced within the country, exacerbating the humanitarian toll.

The current crisis is pushing Lebanon’s economy, which has already endured five years of severe decline, to the brink. Head of the Lebanese Economic Bodies, Mohammad Choucair, warned that the economy is “plummeting into an abyss,” with deep repercussions expected across all sectors. As of now, direct losses from the conflict, including those in key economic sectors, housing, and infrastructure, are estimated to range between $10 billion and $12 billion.

Short-term impacts are severe across critical sectors, with tourism, agriculture, industry, and trade sharply contracting. Increasingly, businesses, especially small and medium-sized enterprises, are being forced to close due to direct damage, diminished consumer demand, and interruptions in supply chains. 

International financial institutions have warned of worsening economic fallout should the conflict extend into 2024. The Institute of International Finance (IIF) projects a 7% decline in Lebanon’s GDP this year, with an additional 10% contraction expected in 2024, bringing Lebanon’s cumulative economic losses since 2018 to roughly 60% of its GDP, which was valued at $53 billion that year.

A recent report from the United Nations Development Programme (UNDP) indicates that Lebanon’s economy faces years of prolonged decline, even if a ceasefire is reached before year’s end. The UNDP forecasts a 2.28% contraction in GDP in 2025 and a further 2.43% drop in 2026. Government revenues are predicted to decline by 9%, with investments expected to fall by over 6% in the next two years. Unemployment is also anticipated to surge as demand for labor drops across various sectors, particularly in small and medium-sized enterprises, which make up 90% of Lebanon’s economy. Many of these businesses have already ceased operations or suspended activities indefinitely.

Lebanon’s tourism industry, typically a crucial source of income, is among the hardest-hit sectors, now facing a possible collapse during the holiday season. Tourism, which usually generates $4 to $5 billion annually, is Lebanon’s second-largest source of foreign currency after remittances, which bring in around $7 billion per year, according to World Bank data. A decline in these earnings would further constrain Lebanon’s already limited foreign currency reserves.

The commercial sector is reeling from the crisis, with activity dropping by 80–90%, except for a surge in demand for essential goods like food and hygiene products due to precautionary stocking by citizens. Agriculture has also suffered a significant setback, with activity falling over 40% and fears mounting over potential crop losses. Industrial production has shrunk by around 50%, with approximately 30% of factories shutting down in conflict zones, coupled with a notable decrease in domestic demand and foreign orders.

Tourism-related industries, including hotels, restaurants, and car rentals, have seen their business plunge by roughly 90% amid extensive physical damage and mass closures in conflict-affected areas.