The UN warns that the conflict between Israel and Hezbollah could cause Lebanon’s economy to shrink by 9.2% in 2024
The United Nations (UN) warned on Wednesday that if the fighting between Israel and Hezbollah continues until the end of the year, Lebanon’s economy could shrink by 9.2%.
UN Warning
The UN Development Program (UNDP) said in a report on Wednesday that the war in 2024 could be much worse than the one between Israel and Hezbollah in 2006.
Lebanon is already in bad shape because of years of political, economic, and social problems, the report said.
Between 2018 and 2021, Lebanon’s economy shrank by 28%, and the Lebanese pound lost more than 98% of its value. This caused prices to skyrocket and people’s purchasing power to drop.
Before the current conflict started, the situation had started to improve in 2022 and 2023. The UNDP even predicted that Lebanon’s economy would grow by 3.6% in 2024, according to Kawthar Dara, an economist with the UNDP in Lebanon.
However, if the fighting continues, the economy might shrink by 9.2% because businesses cannot operate due to Israeli airstrikes and damage to factories and roads.
Impact of Conflict
The report says that even if the conflict ends in 2024, its effects will last for years. It could make Lebanon’s weak economy even worse and lead to a long-lasting economic downturn.
Without significant international help, Lebanon’s economic situation looks bad. The economy is expected to shrink by about 2.28% in 2025 and 2.43% in 2026, even if the conflict stops this year.
This economic slowdown may cause public revenue to drop by 3.2% in 2025 and 3.1% in 2026, making it harder for the government to provide essential services.
The UN agency stated that living conditions in Lebanon have worsened significantly and that the international community should quickly provide humanitarian aid.
The report also mentioned that the damage to Lebanon’s buildings, homes, and industries could be similar to the damage caused by the 2006 war, which cost around $2.5 billion to $3.6 billion to repair.
What to Watch For
On Thursday, Paris will host an international donor conference to raise humanitarian aid for Lebanon and improve security in the southern region of the country. This event was announced by French President Emmanuel Macron earlier this month.
The conference will focus on meeting the UN’s request for $400 million in aid for the Lebanese people affected by the ongoing conflict.
Published: 24th October 2024
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