In a new report on Lebanon, the World Bank says that following the conflict in 2024 and a cumulative contraction that approached 40 percent over the period 2019 to 2024, real GDP is projected to grow by 3.5 percent in 2025, driven by a rebound in tourism, sustained sizeable remittance inflows, a pickup in consumption, and the government’s initiation of reforms. The 2026 outlook is cautiously optimistic, assuming continued reform momentum, higher reconstruction-related inflows, and further recovery inkey sectors.  The escalation in the regional conflict, which occurred at the height of the tourism season in June 2025, disrupted commercial flights and adversely impacted tourist arrivals. Capital inflows needed for recovery and reconstruction, estimated at US$11 billion in the World Bank’s Rapid Needs and Damage Assessment (RDNA), have also not yet materialized. Nonetheless, economic activity has benefited from a return to political normalcy following the election of a President and the formation of government, progress on the reform agenda and reinvigorated tourist activity in July and August 2025.  The government and parliament have begun to deliver on long awaited reforms. A reformed Bank Secrecy Law marks a critical step toward transparency, accountability, and restoring confidence.  The Banking Sector Restructuring Law has also been approved establishing a framework to rehabilitate Lebanon's insolvent banking sector, which has incurred losses estimated at US$ 72 billion—approximately 300 percent of the country's GDP. The latter, however, will only become effective once a second law on the estimation and allocation of losses in the financial sector, the “Financial Gap Law”, is drafted by the government and ratified by parliament. In the governance sphere, the Council of Ministers (CoM) and parliament ratified the Judicial Independence Law to shield the judiciary from interference and rebuild trust in the justice system, endorsed a new merit-based public sector recruitment mechanism, and appointed regulatory bodies for various sectors, including civil aviation, electricity, and telecommunications, which had been without a regulator for years. The CoM also made overdue institutional appointments, including the public prosecutor for financial affairs, vice-governors at the Central Bank, the Banking Control Commission, and the chair and members of the Council for Development and Reconstruction Board of Directors.  The World Bank says positive economic momentum is expected to continue in 2026, with inflation projected to ease, yet balance of payments pressures are likely to persist, underscoring underlying external vulnerabilities.  Sustained progress on the reform agenda and continued political stability could unlock external financing for reconstruction and investment. Inflation is projected to fall to single digits for the first time since 2019, amid exchange rate stability. An increase in the trade-in goods deficit due to higher imports of raw materials and construction goods is projected to widen the current account deficit.  Risks to the growth projection stem from lack of progress on the reform agenda and absence of investment flows. While the budget is projected to balance due to higher revenue collection, the current account deficit is expected to widen, heightening Lebanon’s external financing risks. Terms-of-trade shocks or a decline in service exports and remittance inflows could further enlarge the financing gap.  Short of a debt restructuring in 2026, debt will remain high, leaving Lebanon excluded from international capital markets as per the world bank. (ICE BEIRUT)

Fonte notizia: Bank Audi, 17-23 Nov 2025