CHIYAH — A bulldozer began clearing the rubble of a sports clothing store in Chiyah, Lebanon, in early March, one of dozens of buildings destroyed in Israeli strikes against Hezbollah. The renewed conflict has compounded an economic crisis that began in 2019 and displaced 1.2 million Lebanese, largely from southern Lebanon and Beirut's southern suburbs.

Prices have spiked since the United States and Israel launched a war against Iran on Feb. 28 and a resurgence of fighting between Israel and Hezbollah followed. The closure of the Strait of Hormuz has sent economic shock waves across the Middle East, while in Lebanon, largely unregulated markets have proven vulnerable to price gouging.

"This continues to be a major economic shock, one of honestly an existential nature," Economy Minister Amer Bisat said. He estimated that Lebanon faces an economic loss of around 7% of its GDP due to the war because of company closures, job losses and reduced tourism. Bisat is part of the Lebanese Cabinet that came into office over a year ago on a reformist agenda.

Ayman al-Zain, who owns a sports clothing store, described the cost of rebuilding his business. "Everything is expensive. If I want to open a new store and get mannequins, hangers and some accessories, the prices are very different than before," he said.

Many displaced Lebanese are sheltering in schools without work or depleting their savings to rent apartments or hotel rooms. Many agricultural areas in southern and eastern Lebanon are no longer accessible because of airstrikes and clashes. Generator bills have doubled at times, forcing businesses to shorten operating hours or close on some days to cut costs.

Bisat said his ministry conducted over 4,000 inspections of private generators, gas stations and shops since the war began in March and lodged dozens of complaints to the courts. The government has limited ability to crack down on the handful of companies that import and distribute fuel and other goods.

Since 2019, the Lebanese pound has lost over 90% of its value against the U.S. dollar, and the state electricity company provides only a few hours of power per day, with most Lebanese relying on diesel generators to make up the difference. Lebanon's financial sector suffered about $70 billion in losses, further compounded by about $11 billion in the 2024 war between Israel and Hezbollah, according to the World Bank.

"So this round of war only made an already fragile situation more fragile," Mohamad Faour, a professor of finance, said. Faour's assessment follows a period in which Lebanese banks collapsed in 2019, evaporating depositors' savings and plunging about half of Lebanon's population into poverty.

A tenuous ceasefire is in place between the U.S. and Iran, but talks between Washington and Tehran remain gridlocked. A nominal truce between Israel and Hezbollah has reduced but not stopped the fighting in Lebanon.