A one-year multisectoral action plan to accelerate the government's reform agenda
BEIRUT, June 19, 2025 - Lebanon's real GDP is projected to grow by 4.7% in 2025 supported by anticipated reform progress, a recovery in tourism and consumption and limited capital inflows, according to the latest World Bank Lebanon Economic Monitor (LEM) released today. The economic outlook remains nonetheless shaped by a fragile stabilization in the political and security environment, and the unresolved financial crisis continues to impede large financial inflows and private investments.
The Spring 2025 edition of the LEM titled "Turning the Tide?" has revised the real GDP contraction for 2024 downward to 7.1% (from an original estimate of 5.7% in Fall 2024) bringing the cumulative decline since 2019 to nearly 40%. Inflation is projected to moderate to 15.2% in 2025 assuming continued exchange rate stability and subdued global inflation. Improved revenue collection and a balanced 2025 budget may slightly increase public spending on essential services. However, high fiscal pressures persist, requiring broader structural reforms for long-term sustainability.
"Recent political developments brought a renewed momentum and offer an opportunity to address the fundamentals of Lebanon's overlapping financial, economic, and institutional crises," said Jean-Christophe Carret, World Bank Middle East Division Director. "By prioritizing actionable, high-impact measures, Lebanon can tackle critical issues and move toward sustainable recovery."
The LEM examines the impact of rising global trade uncertainty on Lebanon. While direct effects are limited, given that exports to major markets account for only around 4% of Lebanon's total goods exports, the indirect effects are more difficult to predict as they depend on how evolving global trade dynamics influence investment, inflation, and economic activity worldwide.
The report also includes special analyses on inflation trends and real effective exchange rate dynamics. It argues that while inflation broadly followed global trends before the crisis, since 2019 it has been mainly driven by exchange rate depreciation. With increased dollarization and a stable exchange rate, inflation may return to pre-crisis patterns but will likely remain above global averages due to persistent domestic factors. The real effective exchange rate showed sharp depreciation during the crisis, but this did not lead to stronger export performance due to structural constraints and widespread dollarization.
The Special Focus section of the LEM provides a comprehensive one-year action plan to support government reform program drawing on key lessons from two decades of World bank engagement in Lebanon through policy dialogue, technical assistance and financing of projects. The action plan outlines a set of feasible, high-impact actions that align with the government's stated objectives and can be implemented within its limited tenure. Proposed policy actions prioritize restoring macro-financial stability; rebuilding citizens' trust; and laying the foundation for a new, successful economic development model.
