Lebanon’s real GDP is forecast to grow by 4.7% in 2025, marking the country’s first year of positive economic growth since 2017, according to the newly released Lebanon Macro Outlook by the World Bank. This projected recovery comes on the heels of a prolonged period of economic contraction, including an estimated 7.1% decline in 2024, bringing the cumulative GDP loss since 2019 to nearly 40%.
The return to growth is expected to be driven by several factors, including the resolution of political paralysis, the formation of a reform-minded government, a gradual recovery in tourism and household consumption, limited reconstruction inflows, and a base effect following the sharp economic downturn.
A major turning point occurred with the November 27, 2024 ceasefire that ended the conflict between Lebanon and Israel, which had escalated following the events of October 7 and intensified in September 2024. The conflict further compounded Lebanon’s ongoing economic crisis, with the World Bank’s Rapid Damage and Needs Assessment (RDNA) estimating:
US$6.8 billion in physical infrastructure damage,
US$7.2 billion in economic losses, and
US$11 billion in recovery and reconstruction costs.
The political deadlock that had paralyzed the country for over two years concluded in early 2025 with the election of Joseph Aoun as President in January and the formation of a new government led by Prime Minister Nawaf Salam on February 8. The new leadership has committed to pursuing essential reforms, offering a critical opportunity to address the country’s compounded crises.
Despite the outlook for growth, Lebanon continues to face severe socioeconomic challenges. The World Bank warns that the conflict and its aftermath have deepened poverty and vulnerability. The agriculture, commerce, and tourism sectors—which account for 77% of total economic losses—disproportionately affected low-income and informal workers, particularly in southern regions. Disruptions to health, education, and housing services are expected to raise long-term poverty risks.
At the height of the conflict, more than 1.2 million people were displaced, with approximately 99,000 still internally displaced. The cumulative impact of the financial crisis, conflict-related damage, and reconstruction demands continues to weigh heavily on Lebanon’s recovery prospects.
Nevertheless, the World Bank emphasizes that 2025 offers a critical window for initiating a comprehensive recovery plan centered on reforms, resilience, and inclusive economic growth.
Source: Lebanon Weekly Monitor – Bank Audi
