BEIRUT: The impacts of the Israel-Hamas war are set to push crisis-hit Lebanon’s economy back into recession, the World Bank said on Thursday, blaming mainly a “shock to tourism spending”.
Lebanon’s southern border has witnessed regular exchanges of fire, mainly between Israeli forces and Hamas ally Hezbollah, since the Gaza conflict erupted on 7 October.
The impact of the war had reversed a slight recovery for Lebanon, which has battled a deep economic crisis for years, World Bank said in a report.
The Washington-based bank said that prior to October 2023, economic growth was projected — for the first time since 2018 — to slightly expand in 2023,” by 0.2%.
It attributed the positive pre-war expectations mainly to remittances from the large Lebanese diaspora and summer tourism.
But it added that the current conflict and its spillovers into Lebanon are likely to quickly reverse the tepid growth projected for this year, as the economy returns to a recession.
The report said that the economy will contract primarily due to the shock to tourism spending.
The World Bank said that more than half of travel reservations to Lebanon have been cancelled for winter holidays. It warned that tourism cannot, on its own, serve as the basis for an economic recovery.
It added that real gross domestic product is likely to decline to between minus 0.6% to minus 0.9% depending on the extent of the tourism shock.
Lebanon’s economy
Lebanon’s economy collapsed in late 2019, plunging most of the population into poverty, according to the United Nations.
Bickering politicians, widely accused of corruption, have been unable to agree on steps to save the economy, or even on selecting a new head of state.
The country has been governed by a caretaker government with limited powers and without a president for more than a year as legislators have repeatedly failed to elect a new leader.
