A June 2021 World Bank report estimated that Lebanon’s economic depression is likely to rank among the world’s top three most severe economic crises since the 1850s, noting that the “brutal and rapid” contraction in Lebanon’s GDP was of a magnitude usually affiliated with conflicts or wars.  As of March 2024, Lebanon continued to face depressed economic activity stemming from the onset of the economic crisis in late 2019.  Additionally, following the October 7 Hamas terrorist attack in Israel, U.S.-designated terrorist group Hizballah initiated cross-border fire with Israel along Lebanon’s southern border on October 8.  While these hostilities have remained largely contained to Lebanon’s southern border areas, the instability and risk of escalation present further obstacles for Lebanon’s economic recovery.

The World Bank estimated Lebanon’s real GDP fell 0.6 percent in 2022, after seven percent and 21.4 percent contractions in 2021 and 2020, respectively.  As of March 2024, the Lebanese pound (LBP) has lost more than 98 percent of its value since 2019, and inflation reached an estimated 171.2 percent in 2022.  Since October 2019, Lebanon’s financial sector has imposed ad hoc capital controls, limiting withdrawals from pre-October 2019 bank accounts.  In 2020, Lebanon defaulted on its nearly $31 billion in dollar-denominated debt, the first such default in Lebanon’s history.  Lebanon and the IMF reached a staff-level agreement on Lebanon’s proposed economic reforms in April 2022, in which the Lebanese government committed to eight prior actions before the IMF’s Executive Board would consider financing a $3 billion, four-year loan.  However, as of March 2024, the government had made only limited progress on these prior actions.  The primary obstacle to undertaking these and other much-needed reforms remains persistent political paralysis.  Since the end of President Michel Aoun’s term in October 2022, Lebanon’s presidency has remained vacant.  Meanwhile, the country’s Premiership and Cabinet are in caretaker status with reduced authorities per the country’s constitution, creating a “double vacancy” for the first time in Lebanon’s history.  Even before this double vacancy, Lebanon’s politicians did not pursue reforms at a speed commensurate to the severity of the country’s economic crisis.  The United States has called on Lebanon’s political leaders to set aside their partisan brinkmanship and work for the common good of the Lebanese people. 

While the overall economic picture is bleak, there are still some sources of optimism and U.S. firms may still find commercial opportunities in Lebanon.  In its Fall 2023 Lebanon Economic Monitor, the World Bank noted that “by 2022 and early 2023, the [Lebanese] economy was able to find a temporary bottom following years of sharp contraction, thanks to tourism and sizeable remittance” (while cautioning that “Lebanon’s reliance on tourism and remittance inflows is neither a viable economic strategy nor an economic crisis resolution plan”).  In this context, the World Bank pointed to “signs of stabilization in private sector activity.”  U.S. products and services enjoy relatively excellent receptivity in Lebanon.  Although the market is price-sensitive, when it comes to quality, Lebanese consumers enjoy name brands, exceptional quality, and after-sales support.  In the longer term, Lebanon benefits from a highly educated labor force, diverse culture, rich history, strong tourism appeal, and temperate Mediterranean climate.  The Lebanese diaspora community has provided a backstop to Lebanon’s economic woes through a steady flow of remittances and could be the country’s vanguard of renewed investment if conditions improve, which may result in increased commercial opportunities for U.S. companies. 

Lebanese Customs reported that Lebanon’s total imports in 2022 reached $19.1 billion, of which $968 million (5.1 percent) originated in the United States.  The United States was Lebanon’s fifth-largest supplier of imported goods, after China, Turkey, Greece, and Italy.  According to Lebanese Customs statistics, major U.S. exports to Lebanon were automotive products ($464 million), machinery ($176 million), chemical industrial products ($83 million), vegetable products ($53 million), mineral fuel and oil ($30 million), and food and prepared foodstuffs, beverages, and tobacco ($30 million).

The U.S. government has neither a bilateral investment treaty (BIT) with Lebanon, nor an agreement on the avoidance of double-taxation.  The U.S. government signed a Trade and Investment Framework Agreement (TIFA) with Lebanon in 2006, but the TIFA never came into force.  Since 1999, Lebanon has had observer status at the World Trade Organization (WTO) but has yet to accede to the organization.  In 2002, Lebanon signed an association agreement with the European Union that entered into force in 2006.

Visit State Department’s website for background on the country’s political and economic environment.