War expected to cost Lebanon at least $3.5 billion in tourism and consumption

BEIRUT — The resumption of war between Hezbollah and Israel on March 2 is expected to cost Lebanon $3.571 billion in tourism and domestic consumption revenues in 2026, according to the World Bank’s latest biennial report on the country, published last Friday. The institution also forecast a 6.4 % contraction in GDP.

The estimated losses appear in a special focus section of the Lebanon Economic Monitor, in which the organization notes that the expected economic contraction will be greater than that recorded in 2024, a year marked by a previous military escalation between the same two belligerents. That escalation followed Hezbollah’s opening of a "support front" along the border with northern Israel in the aftermath of Oct. 7, 2023.

The World Bank, however, did not provide new estimates of the damage caused by Israeli military operations in southern Lebanon and other parts of the country bombed in recent months.

To produce its estimates, the World Bank compared the real economy in 2026 with a projection of what it would have been had the conflict not resumed, using a methodology it had already tested in 2024. It added that, in the absence of war, Lebanon could have expected GDP to grow by 4.2 % in 2026.

For tourism, it estimated the number of visitors who would have come to Lebanon in the absence of war and the spending they would have generated. For consumption, the Bank notably relied on nighttime-light data to measure the loss of economic activity.

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Expatriate spending

Tourism accounts for the largest share of the losses, with $3.001 billion in lost tourism receipts. Of this total, $1.837 billion corresponds to travel-related revenues, while $1.164 billion represents spending that Lebanese expatriates would have made in the absence of the conflict.

“Travel service revenues are likely to underestimate actual tourist spending. This is explained by the prevalence of cash transactions in the economy and the fact that some Lebanese expatriates, particularly those who recently left the country, are mistakenly considered residents,” the report’s authors note.

The World Bank estimates losses related to domestic consumption at $569.6 million. This figure is “calculated by adding the consumption losses recorded in south Lebanon ($140.2 million), Nabatieh ($186.4 million), and the southern suburbs of Beirut ($243.0 million),” the three areas primarily targeted by Israeli strikes, often indiscriminately.

The organization nonetheless acknowledges that this “calculation does not take into account a more general decline in consumption linked to the deterioration of household and economic actors’ morale,” nor the possibility that “population displacement toward other host governorates may have led to increased consumption in those regions, particularly due to humanitarian spending by authorities.” It concludes that the analysis assumes these two opposing effects on consumption offset each other.