Beirut, Lebanon – Shortly after Mario Habib opened his barber shop in 2006, a war erupted between Israel and Hezbollah. Twenty years later, he is experiencing yet another conflict.
The shop has become a fixture in his Furn el-Shebbak neighborhood. Mario, a 51-year-old with tattoos and short black hair, cracks jokes as he cuts his clients’ hair, with a steady stream of visitors throughout the day.
However, Mario has noticed that he is not as busy as he once was. Israel’s war on Lebanon and the US-Israel conflict with Iran are harming Lebanon’s economy. Prices are escalating due to supply chain disruptions – particularly for oil from the Gulf region, which has largely ceased since the US and Iran blockaded the Strait of Hormuz. In Lebanon, already grappling with an economic crisis, there is less work available, and people are losing their jobs.
“The cost of running the generator is crippling me,” he stated. “Everything has become more expensive; the price of petrol has doubled, the supermarket is pricier, and even the products [I use for my business] have increased in cost.”
Lebanon’s government had expressed optimism about the country’s economy last year, with the World Bank projecting a modest 3.5 percent GDP growth for 2025.
However, with the country once again embroiled in conflict and the global repercussions of the war on Iran, that projected growth seems to have been erased.
In March, inflation in Lebanon reached an 18-month high. Bank Audi Lebanon now forecasts 0 percent GDP growth in 2026 if the war persists.
Despite these challenges, Mario stated that he refuses to raise his prices.
“I always prefer that the person who comes here feels comfortable,” he explained. “Many things are more expensive, but I prefer to be conservative on this. I feel that if you come to me, you want to be happy and relaxed.”
Compounding Effects
On March 2, Israel intensified its conflict with Lebanon. Following 15 months of Israeli ceasefire violations, Hezbollah responded to Israeli attacks and the assassination of Iran’s Supreme Leader Ayatollah Ali Khamenei two days earlier.
This marked the second time Israel had expanded its attacks on Lebanon in less than two years. However, it also occurred amidst a multitude of other crises for Lebanon, which economists suggest have had a compounding effect on the country’s economy and society.
In 2019, years of financial mismanagement led to a banking crisis, severing people’s access to their money. The currency subsequently entered a freefall, losing over 90 percent of its value.
The Beirut port explosion in 2020 claimed 218 lives and was followed by deteriorating state services in 2021 and 2022, alongside a wave of mass emigration. Then, in October 2023, Hezbollah and Israel engaged in conflict, leading to the displacement of thousands of Lebanese, many of whom have not returned home in almost three years.
In 2024, Israel intensified its attacks on Lebanon, displacing over one million people. To remain solvent – whether as businesses or families – many utilized a portion of their full savings. Others lost jobs as companies were forced to close or reduce their workforce.
An economic rebound followed the November 2024 ceasefire deal, despite thousands remaining displaced from their homes in southern Lebanon. However, Israel’s attacks since March have now undone that progress, with over 1.2 million people displaced, numerous villages in southern Lebanon razed to the ground, and many homes and businesses in parts of eastern Lebanon’s Bekaa Valley and Beirut’s southern suburbs left in ruins.
There is also the issue of globally rising prices due to the US-Israeli conflict with Iran, which has particularly impacted fuel and other costs because of the closure of the Strait of Hormuz.
Sami Zoughaib, an economist and research manager at The Policy Institute, a Beirut-based think tank, stated that Lebanon is experiencing “a very unique moment in economic history.”
“This is a war that comes after a war,” Zoughaib remarked. “It comes after institutional collapse. It comes after one of the worst financial crises in history.”
Should this pattern persist, Zoughaib warned that Lebanon’s economy could soon become unviable, with many investors concluding that opening or operating businesses is not worth the potential return. He added that while some areas had been hit harder than others, the impact had been felt nationwide, with no one untouched by the economic repercussions of the conflict.
Societal Fracture
The 2023-2024 phase of the conflict resulted in significant economic losses for Lebanon.
“Agriculture, commerce, and tourism, sectors accounting for 77 percent of economic losses, are key income sources for low-wage and informal workers now at risk,” according to the World Bank, which in March 2025 estimated reconstruction and recovery costs from the conflict at approximately $11 billion.
In late April, Lebanon’s Finance Minister stated that war-related losses in 2026 amounted to approximately $3 billion, though assessments were ongoing. A month later, Israel continues its attacks and issues displacement orders daily, implying the total amount is expected to be much higher.
The poorest and most vulnerable populations are bearing the brunt of these impacts, according to Farah Al Shami, senior fellow and program director for social protection at the Arab Reform Initiative.
In 2023, remittances to Lebanon totaled approximately $6.6 billion, according to World Bank figures. This year’s figures are anticipated to drop significantly.
A 2023 UNDP report indicated that oil prices significantly influence the level of remittances, particularly from GCC countries. Since March, oil prices have risen by approximately 65 percent, according to the World Bank, meaning many remittances to Lebanon from Gulf countries will be impacted, Al Shami noted.
However, there has also been a societal impact. Israel’s attacks have exacerbated internal divisions in Lebanon, which political analysts suggest is an intentional tactic. They argue that Israeli leaders believe divided neighbors will be easier to manage.
Economists also believe that the economy’s impact on people will lead to further societal fissures. Zoughaib stated that Lebanon’s political elite have historically suppressed any form of working-class solidarity by seeking political scapegoats, a pattern that could be exploited again.
The displacement crisis has primarily affected Lebanon’s Shia community, from which Hezbollah draws its support. However, Israel’s attacks on predominantly Shia areas have pushed these communities into other mixed or homogeneous regions.
At times, Israel has also attacked those areas, further fueling sectarian rifts. Zoughaib believes that some political elites will exacerbate these divisions, blaming the faltering economy on displaced people willing to work for lower wages – a pattern previously seen with Syrians or Palestinians.
“That, for me, is very dangerous,” Zoughaib concluded.
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