Lebanon’s economy is liberal, free-market where the private sector plays an important role. Services and banking predominate, representing 70% of the country’s national product. Agriculture occupies 10% and the remaining 20% is absorbed by the industrial sector. There are no major mineral resources or oil. The public sector is responsible for infrastructure and social policy.

Prior to 1975, Lebanon had one of the most developed economies in the region. Beirut was an important entrepot and became the banking and financial centre of the Middle East.

The 1975-90 period was dominated by an armed conflict and the Israeli invasions of 1978 and 1982, which have dislocated a large number of the population, seriously damaged Lebanon's economic infrastructure, and have resulted in cutting the national output by half and in many business interests relocating overseas. The degree of destruction made the intervention of the state in economic matters necessary: the contribution of the public sector to Lebanon’s GDP rose from 12 percent before 1975, to more than half of the GDP by 1991. 

GDP grew by about eight percent in 1994 and seven percent in 1995. Economic recovery has been helped by a financially sound banking system, family remittances, manufactured and farm exports, and arab and international aid. The Lebanese stock market reopened in January 1996, and international banks and insurance companies begun to return.

In order to finance these reconstruction programs, the government has had to tap foreign exchange reserves and boost borrowing At the end of 1998, economic growth was around 3.0 percent, due to an improvement in investments, especially in the construction and tourism industries. Israel’s 1996 Grapes of Wrath military operation and the ensuing destruction of mainly economic infrastructure, most of which, has been rebuilt followed in 1999 by Israeli aerial bombardment and further destruction of more than half of the total power generation capacity of the country stalled economic activity.

The challenges that the economy is currently facing are believed to be more of a short term and cyclical nature. An upward shift is actually quite plausible once the general environment factors are alleviated. The Israeli withdrawal from South Lebanon in 2000, the further liberalization of the Lebanese economy through the alleviation of trade and non-trade barriers, the potential launch of privatization of public utilities, the debt management measures that would aim at cutting the observed vicious circle of debt servicing/deficit/ debt growth, and the arising signs of economic openness in Syria, all constitute promising developments in this respect. Lebanon’s outlook is finally encouraged by a significant regional role potential driven by its historical comparative edges at large.

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