The World Bank released its Lebanon Macro Poverty Outlook report in which it estimated Lebanon’s economy to have regained momentum during the first half of 2025 (aided by a base effect) despite the negative impact of the regional conflict on commercial flights and subsequently tourism activity, with growth estimated at 3.5% in 2025 (2.0% growth in the agricultural sector, 2.5% growth in the industrial sector and 3.7% growth in the services sector) compared to a 7.1% contraction in 2024. Said rebound is attributed to the improvement in several indicators of real economic activity and comes mainly on the back of political progress (election of new president & formation of a new government) and reform implementation (adjustments to the Banking Secrecy Law, adoption of the Banking Sector Restructuring and Judicial Independence laws and appointment of regulatory bodies for various public institutions). On the fiscal front, indirect tax revenues rose during the first half of the year 2025 owing to a 5.2% increase in customs duties and a 74.8% hike in total excises. The World Bank commented in this perspective that prudent fiscal management allowed for the accumulation of a fiscal buffer for weathering shocks, yet highlighted in this regard the mounting needs for spending on rebuilding institutional capacity, current spending (wages, essential services, etc.) and capital expenditures. The World Bank mentioned however that little progress has been made on debt restructuring after half a decade has passed since the sovereign default of March 2020, with debt (of which 98% is in foreign currencies) representing an unsustainable 176.5% of GDP in 2024. The World Bank noted that inflation has receded to 14.7% in the first half of 2025, thanks to the exchange rate stability since August 2023, yet commented that it remains significantly higher than global inflation due to limited local competition and oligopolistic market structures. The World Bank also commented that the food security situation in Lebanon is gradually recuperating with the number of people classified as food insecure between April and June 2025 standing at 1.17 million compared to 1.65 million earlier in the year, i.e. just after the conflict ended. The World Bank attributed the improvement to the ceasefire, better food assistance and partial market stabilization. The World Bank warned, however, that the food security situation remains vulnerable due to the impaired agricultural infrastructure, inflation and expanding funding gaps in humanitarian programs. On the balance of trade front, the World Bank commented that the deficit widened by 12.9% during the first half of the year, despite exports increasing by 23% year-on-year when compared to imports (14.65%), as the latter form a much larger base. This deficit is mainly financed by remittances, although official figures are understated as per the World Bank due to informal channels, weak balance of payments data and the high dollarization of Lebanon’s cash economy. As far as the outlook is concerned, the World Bank expects the positive momentum to continue in 2026 with economic growth forecasted at 4.0% (2.5% growth in the agricultural sector, 3.0% growth in the industrial sector and 4.2% growth in the services sector), and inflation also anticipated to ease to 8.7% (attaining thus single digit territory for the first time since 2019) versus an expected 15.2% in 2025. The World Bank mentioned, however, that balance of payments pressures are likely to linger. The World Bank added that sustained political stability and reform implementation may unlock external financing for reconstruction and investment, yet warned that delays in the implementation of reforms could jeopardize the growth projections. Finally, the World Bank commented that in the event no debt restructuring is made in 2026, debt levels would remain high thus restricting Lebanon’s access to international capital markets.