Lebanon faces an unprecedented socio-economic crisis as Hezbollah-Israel hostilities exacerbate existing challenges, threatening to undo years of progress and plunging the nation into deeper turmoil.
At a Glance
- UN warns of severe socio-economic crisis in Lebanon due to escalating hostilities
- Lebanon’s economy could shrink by 9.2% if conflicts persist through year-end
- Rising poverty, social instability, and civil unrest pose immediate threats
- Unemployment rate potentially reaching 32.6% by year-end, affecting 1.2 million workers
- World Bank estimates $8.5 billion in war damages, reducing Lebanon’s GDP by 6.6%
Economic Fallout and Humanitarian Crisis
The ongoing conflict between Hezbollah and Israel has pushed Lebanon to the brink of economic collapse, compounding the nation’s pre-existing struggles. The United Nations Development Programme (UNDP) has issued a stark warning about the dire consequences of continued hostilities on Lebanon’s already fragile economy.
If the conflict persists through the end of the year, Lebanon’s economy could contract by a staggering 9.2%. This potential decline follows a 28% contraction in GDP from 2018 to 2022, threatening to erase any economic stability gains made in 2023. The ripple effects of this economic downturn are far-reaching, impacting various sectors and exacerbating unemployment rates.
“Not only are the people of Lebanon facing the immediate threat to life, they are also facing rising poverty, mounting social instability and civil unrest. The impacts of the conflict on the economy and longer-term development in Lebanon are potentially very serious. What is most needed now is a ceasefire,” Achim Steiner, UNDP Administrator, said.
Widespread Economic Disruption
The conflict has caused significant contraction in key sectors such as tourism, agriculture, manufacturing, and trade. Disruption of trade routes, direct shelling, and reduced consumer demand have forced many businesses to close or suspend operations. The Independent Task Force for Lebanon reports that 60% of the country’s businesses have been disrupted due to the conflict, with the commerce sector alone suffering losses of $1.7 billion.
“We came out of this war with nothing. We are starting from zero,” Mr. Raad, a content creator in Beirut who lost his job and home due to the Israeli invasion of Lebanon, told reporters.
The banking sector, once a pillar of Lebanon’s economy, is now struggling. The nation was recently placed on a “gray list” by a global financial crime watchdog, further complicating remittances which have been a crucial lifeline for many Lebanese families.
Humanitarian Crisis and International Response
The human cost of this conflict is high. Over 3,700 deaths, 16,000 injuries, and 1.3 million displaced people have been reported in Lebanon. The World Bank estimates that the war has caused $8.5 billion in damages and reduced Lebanon’s GDP by 6.6%. These figures underscore the urgent need for humanitarian assistance and international support.
In response to the crisis, local initiatives have stepped up. Mariam’s Kitchen, founded by Hani Tawk, has increased its meal distribution from 1,500 to 5,000 daily due to the war. “We are trying to distribute hope and love with these hot meals,” Mr. Hani stated, highlighting the resilience of the Lebanese people in the face of adversity.
