The international credit rating agency Moody's reported that the Lebanese economy is expected to contract by 2% in 2025 and grow by 0.8% in 2026.
The US-based agency indicated that the election of General Joseph Aoun as president could pave the way for the formation of a fully empowered new government, with Aoun benefitting from the backing of international donors.
Moody's revealed that fully restoring state institutions' operations is essential to advancing the implementation of the ceasefire agreement with Israel, signed on November 26, and to securing much-needed international funding. The agency noted that the recent war caused severe damage on Lebanon's economy, with total losses estimated at $8.5 billion, including $3.4 billion in material damages.
In this context, Moody's projects the Lebanese economy will contract by approximately 10% in 2024 but anticipates a recovery in economic activity by 2025, provided the ceasefire remains in effect.
Furthermore, Moody's stated that cutting financial and investment expenditures was essential for achieving exchange rate and price stability, but it undermined long-term growth potential. The agency emphasized that debt sustainability can only be achieved through a significant reduction in the public debt-to-GDP ratio, which is expected to reach 150% by the end of 2024.
According to the report, the Lebanese economy is expected to contract by 2% in 2025 and grow by 0.8% in 2026. Meanwhile, the study showed that inflation levels decreased from 221.3% in 2023 to 67.4% in 2024. These are expected to further decline to 41.3% in 2025 and 35.1% in 2026.
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