World Bank projects war-hit Lebanon’s economy to contract by 6.4 percent

# Why This Matters Lebanon's projected 6.4 percent economic contraction represents a catastrophic blow to a nation already fractured by a decade of financial collapse, and the timing could prove destabilizing across the entire Middle East. The country's currency has lost over 90 percent of its value since 2019, and this fresh contraction will deepen poverty, accelerate brain drain as educated professionals emigrate, and likely trigger a new wave of internal displacement alongside the existing refugee crisis. When economies of this scale contract during active conflict, governments lose tax revenue precisely when they most need resources to manage humanitarian crises and prevent state collapse—a trajectory that could transform Lebanon from a regional economic hub into a failed state dependent entirely on foreign aid. The spillover effects extend beyond Lebanon's borders: economic desperation fuels recruitment for armed groups, increases refugee flows to neighboring countries already straining under Syrian and Palestinian populations, and creates a power vacuum that non-state actors and hostile foreign powers rush to fill.