Lebanon is showing signs of economic recovery, but progress remains uneven, with poverty and food insecurity continuing to challenge households across the country. 

The World Bank’s latest report highlights that while inflation has eased from record highs and the number of people facing severe food insecurity is declining, the broader impact on poverty indicators remains limited.

According to the report, food security remains fragile due to damaged agricultural infrastructure, inflation, and gaps in humanitarian aid financing. At the same time, Lebanon’s real GDP is projected to grow 3.5 percent by the end of 2025 and 4 percent next year, following a decade of severe economic contractions that saw cumulative losses exceeding 40 percent and a 7.1 percent contraction in 2024.

Sectoral growth is expected to be uneven, with agriculture expanding 2.5 percent, industry 3 percent, and tourism 4.2 percent. Inflation is forecast to fall to 8.7 percent next year, down from an anticipated 15.2 percent by the end of 2025, marking the first time it will dip below 10 percent since 2019.

Despite these positive signs, Lebanon continues to face major economic and fiscal challenges. Poverty rates remain high as households struggle with lost purchasing power during the crisis. The latest quarterly assessment found that 1.17 million people face food insecurity, down from 1.65 million in the previous quarter.

Long-term poverty indicators remain alarming. The share of people earning less than $3 per day rose from 0.1 percent in 2013 to 5.9 percent over a decade, while those earning under $8.30 per day now account for more than half of the workforce.

The country’s public finances remain fragile, compounded by the aftermath of the recent conflict that displaced around 1.2 million people and caused significant material and economic losses. The World Bank estimates damages at $6.8 billion, economic losses at $7.2 billion, and reconstruction needs at roughly $11 billion.

Political developments have provided some support for recovery. Lebanon ended a two-year political vacuum with the election of a new president and formation of a government. Reforms and a rebound in summer tourism have contributed to growth, which is expected to continue into next year.

The report also noted improvements in monetary stability, with inflation dropping to 14 percent year-on-year by July and the exchange rate holding steady at 89,500 Lebanese pounds per U.S. dollar since mid-2023. The current account deficit is projected at 15.8 percent of GDP this year, down from 22.2 percent last year, supported by remittances from the Lebanese diaspora, though official figures may understate actual flows.

The World Bank warned, however, that limited progress on public debt restructuring and continued high debt levels could restrict Lebanon’s access to international capital markets, while delays in implementing reforms may jeopardize the country’s fragile recovery.

This is the English adaptation of an article originally published in Asharq Al-Awsat newspaper.