Banque Du Liban recently launched the second issue of its Macroeconomic Review of the Lebanese economy for the second half of 2025 as part of its commitment towards economic transparency and informed analysis. BDL commented that the publication mainly focuses on developments during the first half of the year, yet added that official statistics’ production in Lebanon remains constrained across most sectors, namely for the real economy and public finances.

BDL revealed that the Lebanese economy demonstrated some signs of a “modest” recovery in 2025, as the slightly improved local governance framework has nurtured a better operating environment for economic activity. In details, BDL commented that of a fully empowered government, as compared to a care-taker one previously, added the establishment of regulatory authorities in the electricity & telecommunication sectors and the bolstering of border control measures sent positive signals to domestic and international stakeholders. In addition, the resumption of talks with the International Monetary Fund (IMF) coupled with improved relations with Gulf Cooperation Council (GCC) members have fueled guarded optimism for a turnaround in foreign assistance and a steady return of international capital. In figures, the Macroeconomic Review uncovered that the Lebanese economy registered a real growth of 3.8% in 2025, after registering timid or negative growth rates during the years 2022 (0.0%), 2023 (0.5%) and 2024 (-6.4%). The year 2025 growth was mainly supported by domestic consumption, an improvement in the tourism, commerce & industry sectors and easing inflationary pressures. In details, BDL statistics reveal a 17.3% nominal increase in the imports of consumer goods, which serve as a proxy for consumption, yet cautioned that these levels are still 16.8% below the average consumer imports level registered over the 2010-2019 period. In this vein, BDL commented that the rebound in consumption was partly aided by improved liquidity conditions, as withdrawal limits under circulars 158 and 166 were increased on two occasions in 2025. Additionally, BDL revealed that while remittance flows, a major source for household consumption, dropped by 2.7% on an annual basis, the ~64% increase in passenger arrivals in H2-2025 coupled with the presence of a cash-based economy suggest that unrecorded inflows “likely” offset part of the decline in official remittances. Finally on the consumption front, the Macroeconomic Review indicated that the recovery in consumption remains on the short-term, as it relies on liquidity availability & dependent on external factors rather than on an improvement in the economy’s investment and productive capacity. As far as public expenditures are concerned, the Macroeconomic Review revealed that 2025 budget figures point out to an expected government expenditures figure of ~$5 billion, 44.3% higher than the $3.5 billion level registered in 2024, partly on the back of the increase in the minimum wage from LBP 18 million to LBP 28 million. In details, the review elaborated that this raise coupled with exchange rate stability helped bolster the real purchasing power of public sector wages. Always in the same regard, BDL noted that the impact of the planned public sector wage increase for 2026 will likely be offset in real terms by the $3.3 per gallon increase in excise tax and the proposed 1 percentage point increase in VAT to 12%. Investment wise, BDL indicated that while the nominal value of imports of machinery and equipment, a proxy for capital formation, rose by 31.9% in 2025, the figures still remain ~40% lower than the 2010-2019 average, suggesting that the improvement is attributable to a low-base effect rather than a “sustained investment cycle”. As for the final component of GDP, BDL indicated that imports surged by 24.7% in 2025 to a historical high of $21.1 billion, representing ~64% of GDP, while exports rallied by 34.5% to $3.6 billion, leading to a trade deficit of $17.4 billion which represented a drag on GDP growth. In nominal terms, BDL highlighted that Lebanon’s GDP attained $33.0 billion in 2025 up from $27.7 billion a year earlier, with headline and core inflation easing to 12.2% and 13.5% in the last month of the year from 18.1% & 19.2% on a respective basis in December 2024. Finally on the economic growth front, the Macroeconomic Review cautioned that the positive figures registered in 2025 are expected to “weaken significantly” in 2026 as a result of the local and regional wars. These recent developments are anticipated to exert further pressure on public finances, elevate reconstruction costs, and intensify existing vulnerabilities within the financial sector, thereby further undermining macroeconomic stability and growth prospects.

On a separate note, BDL indicated that it succeeded in achieving foreign reserve accumulation to $12 billion by end of December 2025 despite the decline in remittance inflows and foreign grants, and the increased payments under the circulars 158 and 166. BDL added that during the year 2025 it introduced a set of regulatory and prudential measures aimed at enhancing financial integrity, strengthening depositor protection, and maintaining liquidity discipline. Furthermore the Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT) framework was reinforced through a multi-layered control structure that improved transaction traceability, while the regulatory environment for digital financial services was advanced through the introduction of frameworks governing e-KYC and e-money activities. These initiatives were further supported by key legislative developments, notably the enactment of the Banking Restructuring Law and progress on the draft Financial Stabilization and Deposits Repayment Act.