World Bank2023-12-212023-12-212023-12-21https://openknowledge.worldbank.org/handle/10986/40785Lebanon is hit by yet another crisis: the spillover effects of the conflict in the Middle East. While the country remains mired in political and institutional vacuum, and a crippling socioeconomic crisis for over four years, it has now been hit by another large shock: fear that the current conflict centered in Gaza could escalate further into Lebanon. By 2022 and early 2023, the economy was able to find a temporary bottom following years of sharp contraction, thanks to tourism and sizeable remittances. The temporary bottoming out helped the exchange rate to also stabilize temporarily. With the onset of the current conflict, Lebanon’s economy is projected to be back in recession in 2023. This special focus assesses the impact of the current conflict and its spillovers on Lebanon’s economy. Assuming that the current situation of containment of military confrontation to the southern borders persists, the economy is estimated to contract in 2023, primarily due to the shock to tourism spending.en-USCC BY-NC 3.0 IGOCONFLICTMIDDLE EASTRECESSIONMONEY AND BANKINGReportWorld Bank10.1596/40785