Lebanon’s ambition of restoring its gross domestic product to its 2019 level of $53 billion is no longer a goal that hinges solely on reforms, fiscal adjustment, or inflation control. Increasingly, economists say, it has become tied to the trajectory of regional conflict, shifting ceasefire arrangements, and the uncertain prospect of a durable end to hostilities.

The country’s economy continues to operate under the weight of a fragile and deeply distorted structure, while external pressures—particularly global inflation driven by rising oil prices amid the Israel–U.S. confrontation with Iran that began on February 28—add another layer of volatility. Against this backdrop, analysts are assessing how such dynamics could shape Lebanon’s economic performance in 2026.

In Lebanon, gross domestic product is not treated as a single, unified figure. It is effectively divided into two measures: nominal GDP, calculated using standard statistical methodologies, and real GDP, which attempts to capture the actual cash-based economy operating largely outside formal channels.

This duality reflects long-standing structural distortions, most notably partial dollarization and persistent weaknesses in official statistical capacity and data reliability.

According to the latest report issued last week by the Central Administration of Statistics, nominal GDP reached $30.5 billion in 2024, up from $25.9 billion in 2023. Despite this increase, the figure remains well below pre-crisis levels, standing at only about 57% of the 2019 GDP of $53.3 billion.

In real terms, however, the picture is more severe. GDP at constant prices contracted by 5.2% in 2024, following a decline of 0.5% in 2023 and modest growth of 1.4% in 2022. The report estimates that real GDP in 2024 amounted to roughly 69% of its 2019 level, underscoring the depth and persistence of Lebanon’s economic collapse since the onset of crisis and subsequent shocks.

The trade deficit remained substantial, at approximately 42% of nominal GDP.

For the same year, which included two months of full-scale conflict following what Hezbollah described as “support for Gaza,” gross national income was estimated at 2,708 trillion Lebanese pounds (around $30.3 billion). Gross national disposable income reached 3,268 trillion pounds (approximately $36.5 billion at current prices), boosted primarily by remittances from the Lebanese diaspora.

2025: fragile and uneven recovery

While official 2025 data have yet to be published, projections vary. The Ministry of Economy and Trade estimates growth at around 5%, while the World Bank places it closer to 3.7%. Based on these figures, nominal GDP for 2025 is expected to reach approximately $32.5 billion.

Economist and Economic and Social Council member Anis Bou Diab told Nidaa al-Watan that if inflation is assumed at 12% alongside 5% growth, real GDP could reach about $37 billion in 2025. He described the recovery as weak and uneven, noting its dependence on external inflows rather than productive domestic expansion.

2026 outlook reshaped by conflict

Initial forecasts for 2026 anticipated continued modest growth. However, the escalation of regional tensions and renewed conflict dynamics linked to Iran-related developments have significantly altered expectations.

Economist Nicolas Chikhani told Nidaa Al-Watan newspaper that the impact of the war as “structural collapse rather than continued deterioration.”

He said the conflict had spread across multiple regions of Lebanon, displacing more than one million people. Commercial activity in several areas shifted from contraction to near-total paralysis, while the formal private sector contracted by roughly 50% across industry, agriculture, and services. The hospitality sector suffered the steepest losses, with hotel and restaurant activity falling by up to 80%.

Chikhani added that unemployment could exceed 45%, with an estimated 250,000 additional jobs at risk. Monthly revenue losses are projected at around $2 billion. Overall, he said, GDP could shrink by about 10% by the end of the year, compounding the decline recorded in 2024.

Two possible trajectories

Economists outline two main scenarios for 2026, both heavily dependent on the duration and geographical scope of the conflict and ceasefire arrangements.

In the first scenario, a temporary cessation of hostilities holds after a limited period of war. In this case, global inflationary pressures—driven in part by oil prices—would continue to weigh on the economy. Analysts note that every $10 increase in oil prices adds roughly 0.4 percentage points to global inflation while reducing growth by 0.1% to 0.2%.

Bou Diab estimates that combining inflation with contraction could lead to an overall 5% decline in real economic performance.

Given Lebanon’s full dependence on imported energy, and assuming a 30% rise in oil prices, inflationary pressures would intensify further. With last year’s inflation already estimated at 14%, imported price increases and secondary effects could push total inflation into the 25%–30% range.

In this scenario, nominal GDP could rise artificially to between $36 billion and $37 billion, driven by inflation rather than real economic expansion. Real GDP, however, could still contract by around 7%, according to international estimates.

In the second scenario, if hostilities resume after a brief ceasefire and continue for months, the economic outlook would deteriorate sharply. Analysts warn of a potential shift into stagflation, characterized by surging prices and collapsing demand.

Under such conditions, Lebanon could see its economy return to levels last recorded during the 2019 crisis, with GDP falling to between $16 billion and $18 billion.

Deep structural dependence on external inflows

Bou Diab noted that in 2024, Lebanon suffered direct and indirect losses estimated at $14 billion. International assistance remained limited, with only a $250 million World Bank loan allocated to electricity and infrastructure rehabilitation. He said this was insufficient to offset the cumulative impact of successive crises.

He also stressed that 2025 growth does not reflect real economic recovery, but rather a fragile expansion unsupported by productive investment.

Central Administration of Statistics data further show that consumption expenditure reached 120% of GDP, while remittances accounted for 6.2%. This, analysts say, highlights the extent to which Lebanon’s economy is sustained by external inflows rather than domestic production. “If external conditions deteriorate, the shock is immediately transmitted internally,” one report noted.

The path back to recovery

Despite diverging scenarios, economists broadly agree that Lebanon’s return to a $53 billion economy depends primarily on a sustained cessation of conflict and a credible political agreement framework.

Such a shift, they argue, would be necessary to unlock structural reforms, attract foreign investment, revive tourism, restart industrial activity, and gradually restore employment levels.

Only under those conditions, they say, could Lebanon begin to move away from prolonged stagnation and inflationary pressure toward a more stable economic trajectory closer to pre-crisis levels.