BEIRUT, January 22, 2026 - Lebanon's economy registered in 2025 positive growth signaling the start of a modest recovery following years of severe contraction. According to the latest World Bank Lebanon Economic Monitor (LEM), real GDP expanded by 3.5% in 2025, reflecting early signs of macroeconomic stabilization, a rebound in tourism, and the impacts of crucial-though uneven-reform progress.
The Winter 2025 edition of the LEM titled "A Fragile Rebound" highlights notable progress on Lebanon's reform agenda with the passing of important economic and judicial laws and key appointments in the civil service, which contributed to greater political and institutional stabilization. Despite these achievements, critical structural reforms, including the "financial gap law" and key sector reforms, are still pending. These reforms are crucial for Lebanon to restore macroeconomic and financial stability and strengthen the impact and effectiveness of sectoral reforms.
"Lebanon's recent economic gain underscores the importance of ongoing reforms," said Jean-Christophe Carret, World Bank Middle East Division Director. "Sustaining this fragile recovery will require pursuing swifter and more ambitious macro-financial and sectoral reforms to achieve lasting stability and inclusive growth."
The LEM revised Lebanon's real GDP growth for 2025 downward to 3.5% (from an original estimate of 4.7% in Spring 2025) due to a weaker than expected tourism season given the ongoing conflict, subdued investment and limited reconstruction spending amid uncertainty. The 2025 economic upturn was driven mainly by increased private consumption-supported by strong remittance inflows and greater dollarization of wages- tourism, as well as renewed activity in real estate and construction.
Exchange rate stability has held since August 2023, supported by improved tax compliance and prudent fiscal management. Lebanon's debt-to-GDP ratio is projected to decline in 2025 due to higher nominal GDP, though public debt remains high and the country is still out of international capital markets. The fiscal balance is expected to reach surplus territory on a cash basis, yet revenue mobilization and progressive taxation require further enhancement. Headline inflation is projected to fall to 15.2% in 2025 and is expected to reach single digits in 2026 for the first time since 2019. This downward trend is attributed to the stabilization of the exchange rate and the near-complete dollarization of consumer prices, despite persistent inflation in domestic service sectors such as rent and education.
Looking ahead, Lebanon's economic momentum is forecast to continue, with real GDP growth projected at 4% in 2026-provided reform efforts persist, modest reconstruction inflows materialize, and political stability is maintained. Remittances and tourism will remain critical growth drivers, but risks-including delay on critical reforms and regional instability-threaten the fragile recovery.
