NEW YORK: The United Nations warned on Wednesday that Lebanon’s economy, already reeling from years of political and financial turmoil, could see its Gross Domestic Product (GDP) drop by 9.2 percent in 2024 if the current conflict with Israel escalates further.
In its preliminary assessment, the UN Development Programme (UNDP) warned that the ongoing conflict between Israel and Hezbollah threatens to destabilize Lebanon’s economic recovery.
The UN report compared the current hostilities to the devastating war between Israel and Hezbollah in 2006 but predicted much greater consequences this time due to Lebanon’s already weakened state.
“The scale of military engagement, geopolitical factors, humanitarian impact, and economic fallout in 2024 are expected to far exceed the damage from the 2006 war,” the UNDP said in its report.
Fighting between Hezbollah and Israeli forces, which intensified after Israel launched a ground offensive in southern Lebanon in late September, has already led to significant capital destruction, including factories and roads, according to the report. This, coupled with business shutdowns due to Israeli airstrikes, is forecasted to lead to a steep decline in Lebanon’s economy.
The Lebanese economy had already contracted by 28 percent between 2018 and 2021, with the national currency, the Lebanese pound, losing more than 98 percent of its value. Hyperinflation and a drastic loss of purchasing power have left millions of Lebanese in economic distress.
“Lebanon’s situation had stabilized somewhat in 2022 and 2023, and we expected a growth of 3.6 percent in 2024,” UNDP economist Kawthar Dara told AFP. However, the renewed conflict has derailed those expectations. “Now, we project a 9.2 percent decline if the fighting continues through the end of the year.”
The report warned that the fallout from this conflict would have long-term implications, predicting additional economic contractions of 2.28 percent in 2025 and 2.43 percent in 2026 if Lebanon does not receive substantial international support.
“Without immediate humanitarian relief and sustained development support from the international community, Lebanon’s economic outlook is grim,” the report stated. It urged donors to mobilize quickly to prevent further deterioration of living conditions and to help Lebanon chart a course towards long-term recovery.
