In Chiyah, Lebanon, Ayman al-Zain witnessed the destruction of his sports clothing store, which was among numerous buildings leveled by Israeli airstrikes targeting the Hezbollah militant group. Despite a nominal truce that has lessened but not eradicated the conflict, Al-Zain grapples with the question of whether to rebuild his shop in Beirut's southern suburbs, where he had envisioned passing it down to his children. The stark reality of soaring costs complicates his decision, as he notes the significant increase in prices for items like mannequins and hangers compared to previous years.
The ongoing U.S.-Israeli conflict with Iran and the closure of the Strait of Hormuz have triggered economic turmoil across the Middle East. In Lebanon, these challenges are exacerbated by pre-existing economic troubles and largely unregulated markets, which are particularly susceptible to price gouging. Lebanese Economy Minister Amer Bisat characterized the current situation as an "existential economic shock," given that his reformist cabinet has been in power for over a year.
Since 2019, Lebanon has been enduring an economic crisis that has significantly devalued its currency and crippled its banking system. The collapse of Lebanese banks erased savings for countless depositors, pushing nearly half of the 6.5 million population into poverty amid allegations of systemic corruption and mismanagement. The World Bank estimates losses in the financial sector to be around $70 billion, further worsened by approximately $11 billion in damages resulting from the 2024 conflict between Israel and Hezbollah. The Lebanese pound has lost more than 90% of its value against the U.S. dollar, plunging the nation deeper into crisis.
Electricity supply remains a significant issue, with the state-run provider offering only a few hours of service daily, forcing most citizens to rely on diesel generators. As a result, the economy remains sensitive to fluctuations in fuel prices. Mohamad Faour, a finance professor at the American University of Beirut, asserts that the current conflict has only heightened an already precarious situation.
Currently, 1.2 million Lebanese citizens have been displaced, mostly from southern Lebanon and Beirut's southern suburbs. Many now seek shelter in schools or are exhausting their limited finances renting apartments or hotel rooms. Bisat estimates that the ongoing war will lead to a 7% loss in Lebanon’s gross domestic product, attributing this to business closures, job losses, and a lack of tourism.
Signs of inflation are evident throughout the country. Ahmad al-Farra, a vendor in a typically bustling produce market in Sabra, lamented that customers are choosing not to purchase items due to high prices, which have surged since the recent U.S. and Israeli military actions began on February 28. With customers tightening their budgets, Al-Farra expressed frustration that, despite keeping prices as low as possible, sales remain dismal.
Business owner Riad Aboulteif reported a staggering 90% drop in revenue for his restaurants and bars in the capital since the conflict escalated, as the dwindling middle class in Lebanon cuts down on spending. This has forced him to downsize staff and revise menu offerings to more affordable choices. Aboulteif noted that previous crowds have dwindled to nearly empty establishments, dramatically changing the social atmosphere of places like his bar in Hamra district.
The government has struggled to manage rampant price gouging and hoarding of essential goods in the wake of the war. Many agricultural areas have become inaccessible due to the fighting, leading suppliers to hike up prices beyond necessity. The cost of generator services has doubled in some areas, further burdening families and businesses that rely on these privately supplied utilities. Bisat revealed that over 4,000 inspections have been conducted to address unfair pricing, but the ongoing crisis limits rapid governmental action.
With the conflict showing no signs of resolution, Lebanese families and business owners continue to navigate the escalating challenges posed by the war on a daily basis. As Al-Farra stated, "Only God knows how we’ve been trying to manage ourselves" amidst the chaotic circumstances.
