World Bank: Israel-Hezbollah war intensified Lebanon's economic contraction
By Dalal Saoud
Lebanese businesses owners have been liquidating their businesses and closing stores amid a financial crisis since October 2019 that resulted in soaring poverty and unemployment, with the Lebanese pound losing 90% of its value.
File photo by Nabil Mounzer/EPA-EFE
BEIRUT, Lebanon, Dec. 10 (UPI) -- The World Bank said Tuesday that the Israel-Hezbollah conflict has dealt another significant blow to Lebanon's already struggling economy and emphasized the pressing need for extensive reforms and targeted investments.
The international organization noted in a statement that Lebanon's economic contraction deepened because of the conflict that started in October 2023 when Hezbollah opened "a support front" for Gaza.
The conflict turned into a devastating war with Israel expanding its attacks on Sept. 17, destroying Hezbollah's military and civilian infrastructure and assassinating its leader and top officials and military commanders.
The relentless Israeli air and ground bombardment led to widespread destruction of villages, property, hospitals and schools in Beirut's southern suburbs and in southern and eastern Lebanon. It also forced the displacement of more than 1.2 million people, who fled the targeted areas to more secure regions across Lebanon.
BEIRUT, Lebanon, Dec. 10 (UPI) -- The World Bank said Tuesday that the Israel-Hezbollah conflict has dealt another significant blow to Lebanon's already struggling economy and emphasized the pressing need for extensive reforms and targeted investments.
The international organization noted in a statement that Lebanon's economic contraction deepened because of the conflict that started in October 2023 when Hezbollah opened "a support front" for Gaza.
The conflict turned into a devastating war with Israel expanding its attacks on Sept. 17, destroying Hezbollah's military and civilian infrastructure and assassinating its leader and top officials and military commanders.
The relentless Israeli air and ground bombardment led to widespread destruction of villages, property, hospitals and schools in Beirut's southern suburbs and in southern and eastern Lebanon. It also forced the displacement of more than 1.2 million people, who fled the targeted areas to more secure regions across Lebanon.
A U.S,-brokered cease-fire agreement came into effect Nov. 27, ending the 14-month war that killed more than 4,000 people and wounded 16,600. However, Israel continues its targeted attacks mainly on southern Lebanon, inflicting more casualties and damage.
The World Bank statement said the deepening economic downturn "reflects the severe consequences of widespread displacement, destruction and reduced private consumption," and emphasizes the necessity for comprehensive reforms and targeted investments in critical sectors as "the only viable way forward" after the conflict.
The country's real gross domestic product growth has been cut by an estimated 6.6% in 2024, bringing the cumulative decline in real GDP since 2019 to more than 38% by the end of the year, the World Bank said, projecting economic activity to contract by 5.7% in 2024 -- equivalent to a loss of $4.2 billion in consumption and net exports.
GDP would have grown, albeit tepidly, by an estimated 0.9% in 2024 if the conflict had not broken out.
Last month, the World Bank put Lebanon's physical damage and economic losses from Hezbollah-Israel war at some $8.5 billion.
Jean-Christophe Carret, the World Bank Middle East country director, said the conflict has inflicted yet "another major shock" to Lebanon's economy already in a severe crisis" and highlighted the urgent need for comprehensive reforms and targeted investments "to avoid further delays in addressing long standing development priorities."
"As Lebanon embarks on developing its post conflict recovery and reconstruction plan, an economic stabilization program and an ambitious program of reforms that strengthen governance will be critical to attract the financing needed to put the country on a sustainable long-term recovery path," Carret said.
The World Bank statement warned that Lebanon's fiscal position is likely to deteriorate further due to "rising financing needs to secure essential services and meet urgent demands, compounded by potentially reduced fiscal revenue."
Comprehensive debt restructuring, it said, is critical to regain access to international capital markets to enable the country to tackle its multifaceted challenges.
Achieving macroeconomic stability, improving governance, enhancing public utilities and bolstering human capital remain key priorities. Targeted investments are critical to support sustainable reforms, facilitate the recovery of essential services and rebuild Lebanon's damaged capital stock, the World Bank noted.
Lebanon has been facing a deep, compounded crisis since October 2019 that resulted in soaring poverty and unemployment, with the Lebanese pound losing 90% of its value and most of its sectors struggling.
The World Bank statement said the deepening economic downturn "reflects the severe consequences of widespread displacement, destruction and reduced private consumption," and emphasizes the necessity for comprehensive reforms and targeted investments in critical sectors as "the only viable way forward" after the conflict.
The country's real gross domestic product growth has been cut by an estimated 6.6% in 2024, bringing the cumulative decline in real GDP since 2019 to more than 38% by the end of the year, the World Bank said, projecting economic activity to contract by 5.7% in 2024 -- equivalent to a loss of $4.2 billion in consumption and net exports.
GDP would have grown, albeit tepidly, by an estimated 0.9% in 2024 if the conflict had not broken out.
Last month, the World Bank put Lebanon's physical damage and economic losses from Hezbollah-Israel war at some $8.5 billion.
Jean-Christophe Carret, the World Bank Middle East country director, said the conflict has inflicted yet "another major shock" to Lebanon's economy already in a severe crisis" and highlighted the urgent need for comprehensive reforms and targeted investments "to avoid further delays in addressing long standing development priorities."
"As Lebanon embarks on developing its post conflict recovery and reconstruction plan, an economic stabilization program and an ambitious program of reforms that strengthen governance will be critical to attract the financing needed to put the country on a sustainable long-term recovery path," Carret said.
The World Bank statement warned that Lebanon's fiscal position is likely to deteriorate further due to "rising financing needs to secure essential services and meet urgent demands, compounded by potentially reduced fiscal revenue."
Comprehensive debt restructuring, it said, is critical to regain access to international capital markets to enable the country to tackle its multifaceted challenges.
Achieving macroeconomic stability, improving governance, enhancing public utilities and bolstering human capital remain key priorities. Targeted investments are critical to support sustainable reforms, facilitate the recovery of essential services and rebuild Lebanon's damaged capital stock, the World Bank noted.
Lebanon has been facing a deep, compounded crisis since October 2019 that resulted in soaring poverty and unemployment, with the Lebanese pound losing 90% of its value and most of its sectors struggling.
No comments:
Post a Comment