Lebanon’s economy in numbers: A complex reality with layered challenges

Lebanon was long described as the “Switzerland of the Middle East,” but that image has faded amid accumulating structural imbalances that exposed the fragility of its economic foundations. An economy built for decades on services, trust, and remittances now finds itself without real productive pillars. After more than five years of continuous collapse, the Lebanese pound has become a symbol of lost balance, purchasing power has fallen by over 90%, and more than two-thirds of the population lives below the poverty line.

Lebanon’s economy is among the most complex in the Middle East. Historically, it relied on open trade and finance, making it a regional hub for services and banking. However, successive crises since 2019, along with financial collapse and political paralysis, have pushed the country into one of its deepest crises in modern history.

Traditionally, Lebanon’s economy depends on the service sector particularly banking, tourism, education, and healthcare with heavy reliance on remittances from the diaspora, which remain a crucial lifeline for local consumption.

Can this exhausted economy find a real path to growth again?

Lebanon: From contraction to a glimmer of growth

Economic growth, simply put, is the story of a country producing more to live better. Every rise in GDP means factories running, jobs created, and incomes increasing. While developing countries aim for sustainable growth of 3–5% to ensure stability, Lebanon has gone in the opposite direction after years of contraction, declining confidence, and falling investment. Behind the numbers are daily stories of closed shops, unemployed graduates, and families relying on remittances from abroad just to cover basic needs.

Since 2019, real GDP has contracted by more than 40%, economic activity has slowed with the collapse of the financial system, and investments have frozen. In 2024, armed conflicts and regional instability deepened this decline, according to the World Bank. Any remaining slight growth was driven by limited government spending, while private consumption remained nearly halted.

Experts believe that restoring growth requires stimulating productive sectors such as agriculture, industry, and technology, alongside genuine financial reforms that rebuild confidence in the banking system and curb corruption and waste.

Real GDP is projected to grow by 4.7% in 2025, supported by anticipated reforms, tourism recovery, and increased consumption.

Figure 1: Central Administration of Statistics, Republic of Lebanon

The daily concern of Lebanese consumers

Inflation reflects changes in prices of goods and services over a given period and is usually measured through the Consumer Price Index (CPI) annually and monthly.

In Lebanon, the annual inflation rate slightly declined to 14.2% in August 2025, the lowest level since April 2025, down from 14.3% the previous month, and below the expected 2025 inflation rate of 15.2%.

Regarding the currency, the Lebanese pound has lost more than 98% of its value against the dollar since the 2019 collapse, leading to hyperinflation that peaked at over 200% in 2022. With the exchange rate fixed around 89,500–89,900 LBP per USD in 2023–2024, inflation slowed significantly, dropping to around 60–70% annually.

The main drivers of inflation were increases in the costs of:

Food and non-alcoholic beverages

Alcoholic beverages and tobacco

Health services

Transport and mobility

Restaurants and hotels

Miscellaneous goods and services

However, numbers alone do not tell the whole story. For many Lebanese families, these rates translate into daily realities full of challenges: smaller food baskets, delayed healthcare, and sometimes full reliance on financial support from family abroad. Here, inflation is not just a number on a paper, it is part of people’s daily lives, directly affecting their ability to meet basic needs.

Figure 2: Central Administration of Statistics, Republic of Lebanon

From a savings tool to a new challenge for money

As a result of the banking collapse and frozen deposits, interest rates no longer function as an effective monetary policy tool. While central banks usually rely on raising interest rates to curb inflation, the Banque du Liban is unable to apply its traditional instruments due to lack of trust and multiple exchange rates.

Today, interest is limited to small transactions in LBP or cash USD, with no real impact on investment or savings. The lack of access to loans also prevents Lebanese youth from buying homes, cars, or launching businesses, and solving this issue would give a significant boost to economic growth.

Lebanese youth: Between ambition and emigration

Unemployment in Lebanon is estimated at over 30% of the workforce, rising above 45% among youth, according to World Bank data for 2024.

For young Lebanese, daily life is harsh: they graduate with skills and competencies, yet job opportunities are extremely limited, leaving them trapped between ambition and lack of opportunities. This reality fuels brain drain, delays life plans such as marriage or buying a home, and increases reliance on family support or remittances from abroad.

One of the best future investments the state could make is supporting successful Lebanese youth, both inside and outside the country, by providing job security and opportunities through the private sector. This would help retain and attract talent, create new jobs, and enhance economic growth.

Importing from abroad, neglecting domestic production

Since 2002, Lebanon has consistently recorded a trade deficit due to weak exports and reliance on imports. In 2024, the trade deficit reached about 30% of GDP, despite an increase in nominal export value.

Public debt has also risen to more than 150% of GDP, making any improvement in financial indicators fragile and unsustainable.

Lebanon’s economy at a crossroads

Lebanon can either continue its path of contraction and dependence on external support, or embark on a genuine reform journey that restores confidence and growth capacity. In numbers, the country remains at risk, but with courageous decisions and prudent management, the crisis could become an opportunity to rebuild a more sustainable and equitable economy.

Lebanon is presenting government reform plans to the IMF, World Bank, and international partners. The outcomes of these ongoing negotiations will determine whether Lebanon transitions from crisis management to structural recovery or remains trapped in a cycle of temporary relief and ongoing uncertainty. Any agreement reached represents a beginning and a door opening, but the real step forward depends on proper implementation and the state’s commitment to executing plans and reforms on the ground, ensuring that recovery is tangible and sustainable.