UNDP projects Lebanon's economy could shrink 9.2 pct in 2024 if hostilities continue

UNITED NATIONS, Oct. 23 (Xinhua) -- The United Nations Development Programme (UNDP) estimated on Wednesday that Lebanon's economy could shrink as much as 9.2 percent in 2024 if the escalating hostilities continue through the end of the year.

The scale of the military engagement, the geopolitical context, the humanitarian impact and the economic fallout in 2024 are expected to be much greater than in 2006, the report said in a rapid appraisal published on Wednesday.

The escalation of hostilities in September added another layer of complexity to the already profound economic and financial crisis that Lebanon has been struggling with for the past five years. As a result, the economy is expected to contract by 9.2 percent, if the hostilities persist until the end of 2024, the report said.

UNDP said that even if the fightings were to cease by the end of 2024, the economy is projected to decline by 2.3 percent in 2025, and 2.4 percent in 2026. Without substantial international support, Lebanon's economic outlook remains grim.

The medium-term negative economic outlook is attributed to an expected sharp slowdown in economic activity, the anticipated slow pick-up of recovery and reconstruction efforts due to institutional weakness, in addition to significant losses in capital across all sectors, including infrastructure, buildings, factories, equipment, and utilities, the report said.

The conflict presents profound short-term economic implications, including significant contraction in key sectors, such as tourism, agriculture, manufacturing, and trade. The disruption of trade routes and supply chains, direct shelling, and reduced consumer demand has forced a significant mass of business activities to close or suspend operations.

UNDP expected that the unemployment rate may rise to a staggering 32.6 percent by the end of the year, reflecting significant job losses and economic displacement in the country.

Since 2019, Lebanon's economy has been severely impacted by a series of successive crises, resulting in a 28 percent contraction in gross domestic product (GDP) between 2018 and 2021, according to the agency.

The recent developments, along with the structural challenges facing Lebanon, will increase poverty and vulnerability rates, the report warned, calling for the international community to mobilize immediate humanitarian relief and development assistance to support the country's economic, social, and institutional stability. ■