Lebanon developed as a free-market economy with minimal government regulations. Because the country had a stable and open economy and strict laws regarding secrecy in banking, Beirut became the banking and investment center of the Middle East. From 1975 to 1990, however, warfare severely dislocated most economic sectors and destroyed structures and infrastructures totaling an estimated $25 billion to $30 billion. As the war damaged Lebanon’s economy, most of the rest of the Middle East experienced an economic boom, and businesses moved from Beirut to other Middle East economic centers. Lebanon’s economy did not collapse completely during the war, however, largely because foreign aid to competing militias fueled the wartime economy.

the Israeli invasion of 1982, and the continuing violence have left deep scars and have led to chaos in the economy. There has been extensive destruction in all sectors, but especially in housing, trade, and public services, and the country's productive capacity has been drastically reduced. The greatest reduction in productive capacity seems to be in services, followed by industry and agriculture. The mineral resources of Lebanon are few. There are deposits of high-grade iron ore and lignite; building-stone quarries; high-quality sand, suitable for glass manufacture; and lime. The Litani River hydroelectric project generates electricity and also has increased the amount of irrigated land for agriculture.

The 1975-91 civil war seriously damaged Lebanon's economic infrastructure, cut national output by half, and all but ended Lebanon's position as a Middle Eastern entrepot and banking hub. Peace enabled the central government to restore control in Beirut, begin collecting taxes, and regain access to key port and government facilities. Economic recovery was helped by a financially sound banking system and resilient small- and medium-scale manufacturers. Family remittances, banking services, manufactured and farm exports, and international aid provided the main sources of foreign exchange. Lebanon's economy has made impressive gains since the launch in 1993 of "Horizon 2000," the government's $20 billion reconstruction program. Real GDP grew 8% in 1994, 7% in 1995, 4% per year in 1996 and 1997 but slowed to 2% in 1998, -1% in 1999, and 1% in 2000. Annual inflation fell during the course of the 1990s from more than 100% to 0%, and foreign exchange reserves jumped from $1.4 billion to more than $6 billion. Burgeoning capital inflows have generated foreign payments surpluses, and the Lebanese pound has remained very stable for the past two years. Lebanon has rebuilt much of its war-torn physical and financial infrastructure. Solidere, a $2-billion firm, has managed the reconstruction of Beirut's central business district; the stock market reopened in January 1996; and international banks and insurance companies are returning. The government nonetheless faces serious challenges in the economic arena. It has funded reconstruction by tapping foreign exchange reserves and by borrowing heavily - mostly from domestic banks. The newly re-installed HARIRI government's announced policies fail to address the ever-increasing budgetary deficits and national debt burden. The gap between rich and poor has widened in the 1990s, resulting in grassroots dissatisfaction over the skewed distribution of the reconstruction's benefits.