Al Jazeera English

How Israel’s War on Lebanon Is Pushing Its Fragile Economy to Breaking Point

The video outlines how the renewed hostilities between Israel and Hezbollah are pushing Lebanon’s already fragile economy toward collapse, with massive displacement and a government scrambling to provide basic shelter. Within five weeks, 1.2 million people—about one in five citizens—have been uprooted, while the state has opened roughly 700 temporary centers for 120,000 officially assisted individuals. The conflict is estimated to have erased $2 billion in output, roughly 7 % of GDP, as factories shut, farms halt, and tourism evaporates. Inflation has surged to 17 % driven by soaring energy and shipping costs, and diaspora remittances—once a lifeline—have slipped by up to 10 %. Officials cite the World Bank’s projection of $11 billion in total war‑related losses and warn that reconstruction bills will exceed the 2024 war’s cost. The central bank is dipping into dwindling foreign‑currency reserves to prop up the Lebanese pound, while dollar liquidity remains “tight but manageable” as imports decline. The mounting fiscal pressure threatens the country’s balanced‑budget goal, deepens the recession, and raises the specter of a sovereign‑debt crisis, underscoring the urgency for external financing and policy reforms to stabilize Lebanon’s economy.