The Lebanese economy could go into recession in 2006 because of Israel's war with Hizbollah and its air and naval blockade of the country, Finance Minister Jihad Azour said on Sunday.
The government has said the war inflicted billions of dollars of damage on the economy and has appealed for speedy Arab and international aid to help rebuild thousands of homes and infrastructure destroyed by Israeli attacks.
The Economist Intelligence Unit said in a recent report that Lebanon's 2006 gross domestic product would shrink about 10 percent in real terms and its public debt of around $38.5 billion would be equivalent to more than 200 percent of GDP.
"It is too early to say (whether GDP will shrink by) 10 percent," Azour told Voice of Lebanon radio in an interview.
"There is a risk of negative growth in Lebanon but there is also a chance of a recovery in growth if the blockade is lifted quickly," he said.
Israel has said it would maintain the blockade until a beefed-up United Nations peacekeeping force is deployed in Lebanon to prevent arms shipments from reaching Hizbollah. Lebanon says it is taking steps to monitor the border.
Lebanon's central bank had said in May that the economy was expected to grow by around four or five percent in 2006, up from around one percent a year earlier, when the assassination of former Prime Minister Rafik al-Hariri shook confidence.
Azour said there was "some" capital flight from Lebanon during the war, ignited when Hizbollah captured two Israeli soldiers on July 12 in a cross-border operation.
The minister gave no details on the capital flight.
He said he was confident the economy could recover. "But I must assert to everybody that this will not be easy," he said.