Conflict, economic decline, and governance crisis deepen food insecurity

• The ongoing governance crisis and absence of functional banking and energy sectors continue to limit the government’s capacity to create a favorable environment for business and growth or address multiple humanitarian crises.
• Lebanon has faced record inflation of over 200 percent during most of 2023 as measured by the change in the CPI (Figure 1). As of January 2024, the annual headline inflation rate stood at 177 percent. According to WFP market monitoring, the cost of the survival minimum food expenditure basket (food SMEB) in December 2023 was 164 percent higher than one year ago in terms of LBP and 28 percent higher in terms of USD. As the economy becomes increasingly dollarized, some households are recovering from the impacts of excessive inflation, according to an FAO DIEM assessment conducted in August/September 2023. 
• According to the World Bank, Lebanon’s nominal GDP (USD) declined by 67 percent in 2023 compared to 2018 (pre-crisis). The substantial economic contraction has reduced  the availability of income-earning opportunities for households across the country. With the government unable to pay salaries on a regular basis and recent sharp declines in tourism, reliance on remittances is expected to be increasing.
• The services sector—largely driven by tourism—has typically contributed over 70 percent of the country’s GDP according to the World Bank, with the share rising since the onset of the crisis and surpassing 90 percent in 2021. The conflict in the south and associated travel advisories have significantly reduced levels of tourism since October. This is expected to be resulting in declines in economic activity and income-earning, particularly impacting Lebanon’s more than 90 percent urban population.
• Remittances are an important income source for a majority of households in Lebanon and amounted to an estimated 33 percent of GDP in 2021. According to the UNDP, remittances are sent from several regions across the globe. The greatest share is sent from Gulf countries. Other sources include the USA, western Europe, Africa, Australia, Latin America, and eastern Europe.
• Lebanon is structurally dependent on imports for its staple food supply, with domestic cereal production typically accounting for less than 20 percent of consumption requirements. In the most recent 2022/23 production season, cereal production was estimated to be around 5 percent less than the 2018-2022 average. Dependence on external markets renders the country’s food supply vulnerable to global supply and price shocks. 
• Food importation supply chains remain constrained by the reduction in storage capacity after silos were destroyed by the explosion of 2020, resulting in smaller, cost-inefficient shipments. Higher importation costs and depreciation of the local currency are contributing to higher food prices for households.
• The WFP currently provides regular distributions of emergency humanitarian food assistance to 900,000 Syrian refugees and 700,000 Lebanese nationals. In December 2023, WFP reduced the number of beneficiaries among Syrian refugees from 837,000 to 700,000, attributed to retargeting necessitated by funding shortfalls. As of December 29, 2023, WFP had reported reaching an additional 52,700 people in the conflict-affected south with one-time food assistance (in-kind and cash modalities).

• IDF strikes against southern Lebanon are likely to persist while the conflict in Gaza continues and potentially following a cessation of hostilities. The significant displacement resulting from cross-border fire is likely to continue through September 2024. 
• The governance crisis and poor economic conditions are expected to persist through September 2024. According to projections by UN released in January, GDP is expected to grow slightly by 1.7 percent in 2024. The IMF’s January projections also project slight economic growth in 2024. However, conditions for constrained growth—including weak government institutions, a poorly functioning banking sector, and conflict-related disruptions to tourism and agriculture—are expected to persist. It remains possible that projections for slight economic growth are revised downward as the impacts of declining tourism are fully realized. Overall, minimal improvements in economic output and income-earning are expected during the projection period. 
• Though inflationary pressures are expected to continue slightly easing, the annual headline inflation rate is expected to remain atypically high, and food prices are expected to continue increasing.
• Remittances are likely to remain a primary source of household income across Lebanon. The poorly functioning banking sector will continue to incentivize reliance on informal channels. Though not the most likely scenario, it should be noted that expansion of the conflict could further degrade the banking sector or even render the Beirut airport inoperable, which would disrupt remittance inflows.
• Due to funding shortfalls, humanitarian assistance is expected to continue near current levels or decline further. 

South Lebanon

(Bint Jbeil, Saida, Marjayoun, and Sour)

• As of late February, the IOM has recorded more than 91,000 displacements since the onset of the conflict in the south between the IDF and Hezbollah in early October 2023. Most displacements have occurred in conflict epicenters of Bint Jbeil, Marjayoun, and Sour districts. The displaced households continue to move primarily to Nabatiyeh, Saida, and parts of Sour, though some are moving as far as Beirut. Displaced households have lost assets and access to typical food and income sources, with many unable to meet their essential food and non-food needs.
• About 80 percent of southern Lebanon’s GDP is derived from agricultural production, according to UNDP. However, conflict has negatively impacted the harvesting of fruits and olives. Following the outbreak of conflict in October 2023, the October 2023 to February 2024 olive harvest was significantly disrupted, with many orchards destroyed. According to key informants, a large proportion of the harvest was lost.
• According to OCHA, about 60,000 people remain in frontline border villages in southern Lebanon as of the end of January. The households have limited access to markets and labor opportunities, and face well above-average food and non-food prices, with national-level inflationary pressures compounded by high insurance incurred by traders. 
• Humanitarian access remains limited in active conflict areas of southern Lebanon. 

• The conflict is expected to persist through the projection period. Additional displacements are anticipated as households flee to safer areas. 
• Trade will likely continue to be disrupted, placing sustained upward pressure on prices. Though supply chains are expected to adapt to the current situation, any shifts in the location of conflict will cause renewed setbacks to transportation and market functioning. Some shortfalls of food, fuel, and non-food commodities are expected throughout the outlook period. 
• Agricultural production activities that typically occur during the March to May seasonal rains are expected to be disrupted due to the impacts of conflict including restricted access to farmland, disruptions in supply chains and access to markets that will constrain purchases of agricultural inputs, and damaged/degraded farmland areas due to the conflict. This is expected to drive below-average opportunities for agricultural labor.
• The provision of humanitarian assistance is expected to continue near current levels, with some scale-down possible due to funding shortfalls. Humanitarian access to conflict-affected areas is likely to remain challenged and could become more difficult if the conflict expands or intensifies. 
• Continued conflict is likely to exert upward pressure on food prices, attributed to increased marketing and transport costs as well as periods of below-average market supply. 
• Due to below-average production, households’ food stocks are likely to be depleted before the lean season begins.

North and Northeast Lebanon

(Akkar, Baalbek, El Hermel, Minnie-Dennie)

• Income-earning opportunities are limited in northern Lebanon, attributed to severe economic decline as well as the high influx of Syrian and Palestinian refugees who comprise over 40 percent of the population, and an even greater share in Akkar. Conflict between residents and refugees has increased due to competition for declining labor opportunities.
• Overall, shocks to agricultural production have been severe in the north, linked to high costs of inputs and fuel amid low farmgate prices. Akkar and Bekaa regions are the main producers of potatoes, grown all year round and harvested from April to June. Due to high production costs and low farmgate prices, many farmers opted not to harvest their 2023 potato crops as they would have incurred greater net losses. The price of imported potatoes from Egypt was 20 to 40 percent below the Akkar farm gate price – a significant disincentive to farming households.
• Widespread flood damage followed by an oil leak in Akkar, Beirut, and Mt. Lebanon in late January displaced about  4,264 people and destroyed cropping land.  

• As the refugee and IDP populations increase, competition for labor opportunities and farmland is likely to worsen ongoing conflict with local populations.
• Driven by poor macroeconomic conditions including atypically high inflation rates, prices of agricultural inputs are expected to remain high, limiting the capacities of households to engage in agricultural production.
• Farming households are expected to harvest barley and wheat starting in May/June (Figure 2). This will provide some support to food consumption, though at least July.

• Lebanon hosts about 1.5 million Syrian and 250,000 Palestinian refugees. About 815,000 Syrian refugees are housed in camps, while the remainder are integrated within communities in urban and rural areas, mostly in the north of the country. Meanwhile, Palestinian refugees reside in camps spread across the country, according to the UN. The refugees are facing limited labor and farming opportunities amid overcrowding both in camps and within host communities. Some refugees have experienced multiple displacements, eroding any gains in production capacities.
• Due to inflation, the value of cash transfers linked to the cost of the survival minimum expenditure basket (SMEB) declined by 76 percent in October 2023. Meanwhile, WFP cut in-kind food assistance rations by 30 percent in December 2023. Key informants indicated that suspension of the winterization packages resulted in significant consumption gaps among refugee households. 

• The influx of Syrian and Palestinian refugees is expected to continue due to the ongoing instability in Syrian and the conflict in Gaza.
• The value of humanitarian assistance in the form of cash transfers is likely to continue to decrease due to inflation and funding shortfalls. The ongoing conflict in southern Lebanon and associated population displacement is also likely to deflect international attention from the needs of refugees in the north, with additional cuts to assistance provision possible.