BEIRUT — Lebanon’s economy is projected to shrink by roughly 7% of gross domestic product because of the war, Economy Minister Amer Bisat said in an interview with The Associated Press, as businesses close, workers lose their jobs, and tourism evaporates. The toll extends a crisis that began years earlier but has accelerated sharply since the United States and Israel launched a war against Iran on Feb. 28, and the conflict between Israel and the Hezbollah militant group reignited.
“Companies are closing, people are losing their jobs, tourists are not showing up,” Bisat said from his office in the capital.
Restaurateur Riad Aboulteif said revenue at his several bars and restaurants in Beirut has fallen by about 90% since the war began. “If we didn’t take these measures, we cannot continue,” he said after cutting staff and shifting to cheaper menu items. On a recent night, only a few tables were occupied at one of his establishments in the usually lively Hamra district.
Across town, Ayman al-Zain watched a bulldozer clear what had been his sports clothing store in the southern suburbs, destroyed in Israeli strikes on Hezbollah. “Everything is expensive,” he said, describing how the cost of mannequins, hangers and accessories had spiked. “If I want to open a new store and get mannequins, hangers and some accessories, the prices are very different than before.”
Inflation has spread well beyond reconstruction costs. In the Sabra produce market south of Beirut, vendor Ahmad al-Farra watched an elderly woman check price tags and leave without buying anything. “We’re keeping our prices low so we can sell, and even then we’re not selling,” he said as an Israeli drone sounded overhead. Many agricultural areas in southern and eastern Lebanon are no longer accessible because of airstrikes and clashes, but al-Farra believes suppliers have raised prices beyond what is justified.
Some of the sharpest increases have hit generator bills. For years, Lebanese families and businesses have paid private generator owners to fill the gaps left by the state electricity company, which provides only a few hours of power a day. Since the war began, those bills have sometimes doubled, forcing businesses to shorten hours or close on some days. Bisat said his ministry has conducted more than 4,000 inspections of generators, gas stations and shops since March and filed dozens of court complaints, but acknowledged that the government has little power over the handful of companies that import and distribute fuel and other essential goods.
The fighting has also displaced 1.2 million Lebanese, mainly from the south and Beirut’s southern suburbs. Many now shelter in schools with no income, draining savings to pay rent. The disruption has deepened a disaster that was already unfolding. Since 2019, Lebanon has been in the grip of an economic collapse that vaporized deposits, erased $70 billion from the financial sector and sank roughly half of the population of 6.5 million into poverty, the World Bank has estimated. The local pound lost more than 90% of its value against the dollar.
“Lebanon was already grappling with multiple rounds of crises,” said Mohamad Faour, a finance professor at the American University of Beirut. “So this round of war only made an already fragile situation more fragile.”
The U.S.-Israeli war with Iran and the closure of the Strait of Hormuz sent economic shock waves across the region. A tenuous ceasefire is in place between Washington and Tehran, but negotiations remain gridlocked. Between Israel and Hezbollah, a nominal truce has reduced but not stopped the fighting. With no end in sight, families and business owners are confronting the challenges day by day.
“Only God knows how we’ve been trying to manage ourselves,” al-Farra said.