Hezbollah-Israel Conflict Puts Lebanon’s Fragile Economy at Risk

A humanitarian organization working in Lebanon has analyzed the ongoing Hezbollah-Israel conflict and foresees two potential scenarios, each predicting significant economic downturns for Lebanon by early 2025.

According to the Lebanon Crisis Analysis Team from Mercy Corps, Israel’s ongoing strikes on Hezbollah-aligned targets in Lebanon, even without targeting essential infrastructure, will likely lead to substantial economic and humanitarian consequences.

Their report suggests that Lebanon’s economy may shrink by 12.81%, or about $2.305 billion, by January 2025. Key sectors, including agriculture, manufacturing, and services in the South and the Bekaa Valley, are expected to be heavily impacted.

Agriculture, which supports 80% of the economy in southern Lebanon, could grind to a halt, while the Bekaa Valley’s production—responsible for 2% of the national GDP—could be disrupted as 70% of its farmland faces potential threats, and many Syrian workers flee the area.

The service sector, with tourism alone potentially losing $1.256 billion, is also vulnerable, threatening a crucial part of Lebanon’s economic stability.

If Israel intensifies its blockade and extends bombings to essential infrastructure, Lebanon’s GDP loss could surge to 21.9%, equating to a $3.938 billion hit, the report warns.

Additionally, over 1.5 million people may face displacement, heightening political and intercommunal tensions as Shia Muslims move to regions with different religious demographics, such as predominantly Christian, Druze, or Sunni areas.

Already, 1.2 million people have been displaced from areas in southern and eastern Lebanon and from southern suburbs of Beirut. This comes as Lebanon struggles through a five-year economic crisis, marked by a sharp currency devaluation, which had only recently shown signs of stabilization before the conflict reignited.