CHIYAH, Lebanon -- Ayman al-Zain stood watching one recent afternoon while a bulldozer removed debris from the site of his former sports apparel shop, one of many structures leveled by Israeli attacks targeting the Hezbollah militant organization.

A fragile truce now holds that has lessened but not ended the violence, leaving Al-Zain to weigh the prospects of reconstructing his Beirut southern suburbs store, which he had envisioned handing over to his children. Yet rebuilding seems remote, not just due to ongoing airstrike threats.

"Everything costs a fortune now," he explained to The Associated Press. "To launch a new outlet with mannequins, hangers and basic fixtures, the rates are far higher than previously."

The U.S.-Israeli conflict with Iran, coupled with the Strait of Hormuz shutdown, has unleashed financial tremors throughout the Middle East. Lebanon's plight is aggravated by its pre-existing fiscal woes and loosely monitored markets prone to exploitative pricing.

"This represents a profound economic jolt, verging on existential," stated Economy Minister Amer Bisat, a member of the reform-oriented Lebanese Cabinet installed over a year back.

Since 2019, this small Mediterranean nation has endured a devastating financial collapse that shredded its currency's worth and crippled its banks.

Lebanese banks imploded then, wiping out savers' funds and driving roughly half of its 6.5 million residents into destitution after years of corruption, extravagance and poor governance. Financial sector damages reached about $70 billion, worsened by another $11 billion from the 2024 Israel-Hezbollah hostilities, per World Bank figures. The Lebanese pound has plummeted over 90% versus the U.S. dollar.

The insolvent state power utility delivers just hours of electricity daily, forcing most residents to depend on diesel generators. This heightens vulnerability to fuel cost surges.

Lebanon was already navigating layered crises, noted Mohamad Faour, finance professor at the American University of Beirut. "This latest conflict has only intensified an already precarious state."

The current war has uprooted 1.2 million Lebanese, mainly from the south and Beirut's southern outskirts. Numerous are hunkered in schools jobless or depleting savings on rented flats or hotels.

In an AP interview from his office, Bisat projected war-related economic damage at roughly 7% of GDP, citing shuttered firms, unemployment spikes and vanished tourists.

Inflation signs are everywhere.

At Sabra's typically vibrant fruit market south of Beirut, seller Ahmad al-Farra appeared downcast as an older shopper eyed watermelons, tomatoes and potatoes before leaving empty-handed upon seeing tags.

Costs have soared since the U.S. and Israel initiated war on Iran February 28, soon followed by renewed Israel-Hezbollah combat.

"We hold prices down to move goods, yet sales lag," al-Farra remarked amid the buzz of an Israeli drone above.

Afraid even if able to buy, shoppers curb discretionary spending, emptying many shops.

Riad Aboulteif, operator of multiple Beirut eateries and lounges, reported a 90% revenue plunge since hostilities erupted, as Lebanon's dwindling middle class trims expenses.

Folks hoard cash for basics, skipping birthday bashes or festivities, he noted at a Hamra Street bar where patron buzz once drowned out jazz tunes.

That evening, few seats filled. He trimmed staff and revamped menus for budget options.

Meantime, the insolvent regime falters in curbing predatory profiteering or hoarding of fuel and necessities.

Airstrikes and fighting block southern and eastern farmlands, but al-Farra suspects vendors inflate beyond cost hikes.

Generator charges show sharpest jumps.

For years, households and firms have settled several bills for private power and water amid state shortfalls. Local generator operators bill monthly; some owners pass costs to renters.

Irked entrepreneurs report doubled generator fees, prompting reduced hours or closures to economize.

"Without such steps, survival is impossible," Aboulteif affirmed.

Bisat noted his team ran over 4,000 checks on generators, fuel stops and retailers since March war onset, filing numerous court cases. Resolution lags, however.

Meanwhile, authorities lack leverage over few firms handling fuel and goods imports.

With war persisting indefinitely, relief appears distant.

A shaky U.S.-Iran ceasefire endures, but Washington-Tehran negotiations stall. The Israel-Hezbollah lull curbs but does not cease Lebanese clashes.

Lebanese households and entrepreneurs tackle daily hardships, clinging to optimism.

"Just God knows our struggles to cope," al-Farra reflected.