Lebanon's economy is expected to grow by 4.7% in 2025, according to the World Bank's latest Lebanon Economic Monitor (LEM). This growth is anticipated due to progress in reforms, a recovery in tourism and consumption, and limited capital inflows. However, the economic outlook remains influenced by a fragile stabilization in the political and security environment. The ongoing financial crisis continues to limit large financial inflows and private investments.
The Spring 2025 edition of the LEM, titled “Turning the Tide?”, has revised Lebanon's real GDP contraction for 2024 downward to 7.1%, from an earlier estimate of 5.7% in Fall 2024. Since 2019, the cumulative decline has reached nearly 40%. Inflation is projected to moderate to 15.2% in 2025 if exchange rate stability continues and global inflation remains subdued. Improved revenue collection and a balanced budget for 2025 may slightly increase public spending on essential services; however, high fiscal pressures persist, necessitating broader structural reforms for long-term sustainability.
Jean-Christophe Carret, World Bank Middle East Division Director, stated: “Recent political developments brought a renewed momentum and offer an opportunity to address the fundamentals of Lebanon’s overlapping financial, economic, and institutional crises." He emphasized that prioritizing actionable measures could help Lebanon tackle critical issues toward sustainable recovery.
The LEM explores how rising global trade uncertainty impacts Lebanon. Direct effects are limited since exports to major markets account for only about 4% of total goods exports. However, indirect effects are harder to predict as they depend on evolving global trade dynamics affecting investment, inflation, and economic activity worldwide.
Special analyses within the report focus on inflation trends and real effective exchange rate dynamics. The report notes that while inflation followed global trends before the crisis since 2019 it has been driven mainly by exchange rate depreciation. With increased dollarization and stable exchange rates now present, inflation might return to pre-crisis patterns but will likely remain above global averages due to persistent domestic factors.
The Special Focus section presents a comprehensive one-year action plan supporting government reform programs based on lessons from two decades of World Bank engagement with Lebanon through policy dialogue technical assistance financing projects outlining feasible high-impact actions aligning governmental objectives implementable within its limited tenure prioritizing restoring macro-financial stability rebuilding citizens’ trust laying foundations new successful economic development model.