The threat of a standoff between Israeli forces and Lebanese armed group Hezbollah spiraling into a "full-scale war" is stoking fears on both sides of the border, as the world anxiously awaits a cease-fire deal in the Israel-Palestine conflict.

The situation is particularly delicate for Lebanon, which has been entrenched in years of economic hardship and political deadlock. The country has been without a president since October 2022.

On Monday, it was widely reported by Middle Eastern and other media outlets that the Manufacturers Association of Israel, or MAI, had advised more than 2,000 industrial factories across the country to prepare for a "full-scale war "between Israel and Hezbollah.

Clashes have sometimes taken place between forces from both sides, but the fighting has intensified since Oct 8, a day after Hamas attacked Israel.

More than 320 people have been killed on the Lebanese side. These include 216 Hezbollah fighters and 59 civilians, with some journalists among the dead.

The National reported on Wednesday that Israel "has planned for a war" in southern Lebanon to remove Hezbollah from the border and the Lebanese militant group was preparing to face "all scenarios", including a ground invasion. The report cited military and security sources in both countries.

The MAI issued its warning in a letter titled "Industry's Preparation for Full-Scale War on Israel's Northern Border" sent to all MAI member plants, which make up 90 percent of Israel's total industrial output and employ an estimated 400,000 workers, Xinhua News Agency reported.

In the letter, Ruby Ginel, chief executive officer of MAI, cited government officials and the Israeli defense minister as sources, saying Israel could be heading for increased military intensity if a diplomatic solution is not found for the incidents on its northern border.

Pierre El Haddad, a professor at Saint Joseph University in Beirut, said that while people were leaving Lebanon long before Oct 7 because of the economic and political crises, the current situation is worrying.

"The risk is here. People are trying to get along with their lives and to continue developing or reconstructing their businesses. They don't have the luxury to leave or stop working," he told China Daily.

El Haddad noted that when a country has security worries, it tends to slow down economic activities.

Last December, the World Bank published its Lebanon Economic Monitor Fall 2023 "In the Grip of a New Crisis" report, noting that spillover effects from the ongoing conflict centered on nearby Gaza "pose yet another large shock to Lebanon's precarious growth model".

It also said Lebanon topped the list of countries hardest hit by nominal food price inflation in the first quarter of 2023, hitting 350 percent year-on-year in April. This exacerbated the precarity of living conditions for the poorest and most vulnerable sections of the population.