Lebanon’s economy recorded positive growth in 2025, marking the beginning of a modest recovery after years of severe economic contraction. According to the latest World Bank Lebanon Economic Monitor, real GDP expanded by 3.5 percent in 2025, reflecting early signs of macroeconomic stabilization, a rebound in tourism, and the impact of reform progress, albeit uneven.
The Winter 2025 edition of the report, titled A Fragile Rebound, highlights advances in Lebanon’s reform agenda, including the passage of key economic and judicial laws and important civil service appointments that have contributed to greater political and institutional stability. However, several critical structural reforms remain outstanding, notably the financial gap law and sector-specific reforms, which are essential to restoring macroeconomic and financial stability and improving the effectiveness of broader reform efforts.
Jean-Christophe Carret, World Bank Middle East Division Director, emphasized that while recent economic gains are encouraging, sustaining the recovery will require faster and more ambitious macro-financial and sectoral reforms to ensure long-term stability and inclusive growth.
The report revised Lebanon’s 2025 growth estimate downward from 4.7 percent to 3.5 percent, citing a weaker-than-expected tourism season amid ongoing conflict, subdued investment, and limited reconstruction spending due to prevailing uncertainty. Growth in 2025 was largely driven by increased private consumption, supported by strong remittance inflows and greater dollarization of wages, alongside renewed activity in tourism, real estate, and construction.
Macroeconomic conditions have shown signs of stabilization, with exchange rate stability maintained since August 2023, supported by improved tax compliance and prudent fiscal management. Lebanon’s debt-to-GDP ratio is expected to decline in 2025 due to higher nominal GDP, although public debt levels remain high and access to international capital markets has yet to be restored. The fiscal balance is projected to move into surplus on a cash basis, but further improvements in revenue mobilization and progressive taxation are still needed.
Inflation is projected to ease to 15.2 percent in 2025 and is expected to fall to single digits in 2026 for the first time since 2019. This decline is attributed to exchange rate stability and the near-complete dollarization of consumer prices, although inflationary pressures persist in domestic service sectors such as rent and education.
Looking ahead, Lebanon’s economic recovery is expected to continue, with real GDP growth projected at 4 percent in 2026, provided reform momentum is sustained, modest reconstruction inflows materialize, and political stability is maintained. While remittances and tourism are likely to remain key growth drivers, delays in critical reforms and ongoing regional instability pose significant risks to the country’s fragile economic rebound.
