Economic Impact of Israel-Hezbollah Conflict on Lebanon

By Clauda Tanios

Key Findings

The World Bank reported that the ongoing conflict between Israel and Hezbollah has resulted in approximately $8.5 billion in damages and losses to Lebanon, with expectations for final figures to be significantly higher.

The conflict, which was ignited by the Gaza war, had already been ongoing for nearly a year before Israel launched an offensive in September, targeting Lebanon with airstrikes and troop movements into the south.

Economic Losses

Lebanon is facing estimated economic losses of $5.1 billion over the next 12 months, primarily affecting sectors such as commerce, tourism, and agriculture.

• Direct Physical Damage: $3.4 billion according to the World Bank's Damage and Loss Assessment.
• Lebanon's real GDP is projected to contract by at least 5.7% in 2024, contrasting with a growth of 0.9% in a no-conflict scenario.

The country has already seen a substantial 34% economic contraction over the past five years, equating to a loss of 15 years of economic growth.

Sectoral Impact

• Housing: Estimated damage of $2.8 billion, with over 99,000 housing units partially or fully damaged.
• Agriculture: Over $1.1 billion lost due to crop destruction and livestock losses, especially in southern regions.
• Commerce: Damage estimated at $178 million, with overall economic losses of $1.7 billion.
• Education: Estimated losses of $215 million.
• Environment: $221 million in damages.
• Health Sector: Losses of $338 million.
• Tourism and Hospitality: Losses around $1.1 billion. This sector is one of Lebanon's main economic drivers.

Broader Implications

According to the report, the conflict has broader social and environmental implications in Lebanon, exacerbating the issue of food insecurity.