AN ECONOMETRIC ANALYSIS OF THE KEY DRIVERS OF LEBANON’S ECONOMIC RECOVERY AFTER THE FORMATION OF THE 2025 GOVERNMENT

Abstract

Lebanon has suffered from a multidimensional crisis, one of the most severe economic and financial collapse in modern history. This is characterized by systemic financial instability, institutional breakdown, and deep political turbulance. This article is meant to distinguish the key factors that can promote Lebanon’s economic recovery using an econometric model formed of thirteen explanatory determinants organized into institutional, macroeconomic, structural, and sectoral components. Relying on annual time series data from 1995 to 2023, the model estitmates the effect of effective governance, market efficiency, human capital, diversification, crisis resilience, globalization, political reform, structural reforms, monetary adjustment, foreign support, tourism and reconstruction, private sector and environmental sustainability on GDP Growth. The outcomes indicates that effective governance and institutions, human capital and innovation, private sector dynamism, and political stability are the most statistically and economically significant factors of rebound. Furthermore, the analysis shows that external indicators such as international aid and remittances necessitates credible domestic reforms and resilient institutions to yield productive outcomes. This study concludes that Lebanon’s economic recovery is dependent on a multidimensional strategy that merges structural transformation, institutional modernization, and inclusive policy design. Policy recommendations underline the urgent need for public sector reform, investment in education and innovation, fiscal consolidation, and a transition from humanitarian aid to sustainable development financing. Lebanon