Ayman al-Zain watched as a bulldozer cleared the rubble of his sports clothing store in Beirut's southern suburbs, one of dozens of buildings destroyed in Israeli strikes against Hezbollah. With a nominal truce in place that has reduced but not halted the fighting, he considered whether to rebuild the shop he once hoped to pass on to his children. But he said rebuilding is unlikely any time soon, not only because of the fear of further airstrikes.
“Everything is expensive,” he said. “If I want to open a new store and get mannequins, hangers and some accessories, the prices are very different than before.” The U.S.-Israeli war with Iran, and the closure of the Strait of Hormuz, have sent economic shock waves across the Middle East. In Lebanon, those woes are compounded by the country's existing economic problems and largely unregulated markets vulnerable to price gouging.
Economy Minister Amer Bisat described the situation as “a major economic shock, one of honestly an existential nature.” Lebanon has been in the throes of an economic crisis since 2019, when its banking system collapsed, evaporating depositors' savings and plunging about half of the population of 6.5 million into poverty. The World Bank estimates losses of some $70 billion in the financial sector, further compounded by about $11 billion in damage from the 2024 war between Israel and Hezbollah. The Lebanese pound has lost over 90% of its value against the U.S. dollar.
The cash-strapped state electricity company provides only a few hours of power a day, and most Lebanese rely on diesel generators, making the economy particularly vulnerable to fuel price increases. With the new war, 1.2 million people have been displaced, many sheltering in schools with no work or draining savings on rented accommodation. Bisat estimated an economic loss of around 7% of gross domestic product because “companies are closing, people are losing their jobs, tourists are not showing up.”
In the Sabra produce market south of Beirut, vendor Ahmad al-Farra watched a customer walk away after checking price tags. “We're keeping our prices low so we can sell, and even then we're not selling,” he said. Restaurant owner Riad Aboulteif said his revenue has dropped by about 90% since the war began, forcing him to downsize staff and restructure menus with more affordable items. The government, meanwhile, has struggled to crack down on profiteering and hoarding of fuel and other essentials.
